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 109th 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
by Tyler Prochazka | Feb 21, 2018 | Opinion
As income inequality continues to soar in the US and around the world, progressives are in a heated debate as to what the most effective policy may be to address growing precariousness.
My recent article reflected a left-leaning criticism from Philip Harvey of Universal Basic Income (UBI) as unaffordable from a political standpoint, and counterproductive in advancing politically feasible solutions such as a job guarantee.
There has been much research done on the subject of basic income’s cost. Karl Widerquist has become a prominent voice on this subject, arguing that the net cost is the true cost that should be considered.
In reaction to my interview with Harvey, Widerquist said the arguments about UBI’s cost were misleading, and in reality UBI is far more inexpensive than simplistic calculations let on.
“If the government gives a dollar and takes a dollar from the same people at the same time, it doesn’t cost anyone anything. According to my analysis, UBI can eliminate poverty by putting $539 billion in the pockets of low-income people after they’d paid their taxes and received their UBI. The only meaningful cost of that UBI is higher-income people have to make do with $539 billion less in their pockets after they’ve paid their taxes and received their UBI,” Widerquist said.
In “Financing Basic Income: Addressing the Cost Objection,” a book edited by Richard Pereira, also argues that the actual cost of basic income is largely overstated. Pereira told me that basic income can create a surplus to lower taxation burdens elsewhere.
“The demogrant is similar, with a seemingly much larger cost upfront. I say ‘seemingly’ because as some major studies that I reference explain, the demogrant can be “calibrated” to achieve the same result/cost as the NIT,” Pereira said.
The book persuasively addresses the critics that say UBI is too expensive. Other savings noted by Pereira’s book, such as those from reduced crime and improved health due to UBI, are important in the calculation of basic income’s net surplus. However, these topics deserve a separate consideration.
One area basic income advocates need to emphasize more is this clawback of basic income. As basic income pushes up an individual’s income, it subjects a person to paying back a portion of their UBI under the current income tax system, as Pereira’s book notes. Moreover, many individuals relieved from poverty due to UBI will no longer qualify for other welfare benefits.
As such, the actual long-term tax rates needed in a world with UBI is probably substantially lower than what the gross cost would suggest, because the government will start receiving a portion of everyone’s basic income back to use for the following year’s UBI.
A benefit of the Negative Income Tax (NIT) is that the gross cost and net cost are the same, because they immediately clawback the NIT credit in one’s taxes. This tax is politically superior to UBI’s indirect clawback through other taxes. However, a monthly UBI paid upfront to all in the same amount is still desirable to NIT because it ensures that everyone receives the funds, especially in the event an individual experiences a financial emergency and does not have the time or ability to apply for assistance.
Basic income advocates can learn from the payback scheme in the Affordable Care Act and combine the UBI proposal with a phase-out in the Negative Income Tax (NIT).
A helpful analogue is the ACA’s clawback of insurance subsidies. An individual can receive healthcare subsidies based on the previous year’s income tax, but pay back some or all of the subsidy through their income tax if they make more the following year. This lowers the amount that the government has to tax for the following year to pay for new subsidies.
The basic income could be paid upfront in the same amount to each individual on a monthly basis. However, the clawback from high-income earners should be more explicit, with a NIT type phase-out based on annual income taxes for high earners.
Perhaps 50 cents could be paid back on each dollar earned above $50,000. The rest of the clawback (and net funding for low-income basic incomes) can occur in indirect ways, such as through carbon taxes or financial transaction taxes.
Having high-income earners pay back their UBI through the income tax means that other taxes will not have to be raised as significantly. It may be helpful in the political realm to with this built in clawback because it is easier to understand.
At the end of the day, a UBI is likely the most effective way to end global precariousness. It’s time to get down to the specifics of how we make a UBI above the poverty line politically possible.
“There is no benefit to working people to being under the constant threat of poverty, homelessness, and destitution, if they have refuse or find themselves unable to take orders given to them by more privileged people. We need to build an economy based on positive incentives, not threats. A generous UBI can do that. A job guarantee cannot,” Widerquist said.
by Faun Rice | Feb 19, 2018 | News
Image by MaxPixel: Trakai Castle Lithuania
On December 6, 2017, Swedbank published a report on the Baltic Sea Region entitled “Heart-warming growth is a poor excuse to postpone reforms.” The report includes a chapter on Universal Basic Income, wherein the bank models the current economic feasibility of UBI in the Baltics.
Swedbank is a bank based in Stolkholm, Sweden. Its research arm publishes annual economic assessments of Baltic Sea region countries, which include Germany, Denmark, Norway, Sweden, Finland, Russia, Estonia, Latvia, Lithuania, and Poland. The December 2017 report and executive summary focus primarily on Swedbank’s four main markets: Sweden, Estonia, Latvia, and Lithuania.
The report highlights a time when global economic growth has helped Baltic Sea region countries reach cyclical economic peaks. However, it states that geopolitics, and populism in particular, remain risks to further growth.
Swedbank suggests that rising income inequality, combined with fears about unemployment driven by automation and globalization, contribute to populism and need to be combatted in order to ensure sustainable economic growth. The report proposes that populism can be circumvented by socioeconomic policy that ensures that growth is inclusive (i.e., where prosperity is distributed equitably across all of a country’s economic classes).
As such, Swedbank’s report argues that this period of prosperity in the Baltic Region has created an ideal context for reform and investment in long-term economic wellbeing. The report delivers an in-depth analysis of the economies of Sweden, Estonia, Latvia, and Lithuania, commenting on GDP growth and the potential to create new socioeconomic policies. It also targets specific needs in each country, referencing indicators based partially on the UN’s sustainable development goals.
Sweden scores higher than the Baltics on most of Swedbank’s UN SDG-based indicators. However, the report comments on the need for all identified countries to take the opportunity to enact policy reform.
Swedbank addresses Universal Basic Income as one potential option for reform that will reduce income inequality and encourage sustainable growth. The report concludes that UBI is currently unaffordable for the Baltics, but that elements of a basic or guaranteed income, introduced carefully, could come with numerous social benefits.
Swedbank in Lithuania. Credit to: Delfi
UBI: Current feasibility for the Baltic Region
Swedbank identifies several arguments for UBI, including the idea that it will increase income security and thus reduce fears around unemployment and job loss, along with suggestion that UBI solves or mitigates problems with existing social security systems. The argument that UBI will minimize bureaucratic costs associated with social security systems is less relevant in the Baltics, where only 1.2 to 2.1% of total “social protection” expenditure is administrative.
The report provides a summary overview of some of the questions associated with UBI implementation, such as its impact on employment and the economy, or the concern that it would negatively impact assistance given to the disabled or elderly.
Using 2015 data on government spending on social protections in Estonia, Latvia, and Lithuania, Swedbank evaluates the feasibility of a budget-neutral UBI in these countries. The report tries two different models, one in which old-age pensions are retained by the elderly, and the other in which pensions are included in the money redirected towards UBI. For each of these two scenarios, the report presents two further options: one wherein all residents of a country receive UBI, and another wherein children up to the age of 16 receive only 50% of adult UBI payments. Swedbank does not make any changes to tax revenue in these examples.
The report finds that, given existing budgets, UBI monthly payments to individuals would only reach 48-55% of the at-risk-of-poverty threshold for each Baltic country, less if old-age pensions were retained for the elderly. A UBI at the poverty line, distributed to all residents equally, would require doubling social security budgets in Latvia and Estonia, or an 82% increase in Lithuania, becoming 20-25% of each country’s GDP.
While Swedbank concludes that a UBI is currently unaffordable in the Baltics, the report comments that some components of a “basic income model” might simplify and improve existing social security programs. The authors suggest that governments could improve their systems’ accessibility by eliminating means testing and other conditions currently in place for those trying to get support. They also propose that a gradual decrease in benefits, rather than a sharp removal once a person becomes employed, might help incentivize recipients to stay in the labour market.
Another alternative discussed is a “partial” guaranteed income delivered only to particular cohorts of people. For example, Lithuania has an existing program that provides lump-sum cash benefits to every child born, with no conditions placed upon family income.
More information at:
“Baltic Sea Report: Heart-warming growth is a poor excuse to postpone reforms,” Swedbank, December 6th 2017
“Sustainable Development Goals,” United Nations
“Swedbank Macro Research: Baltic Archive,” Swedbank, February 2018
Vlada Stankūnienė and Aušra Maslauskaitė, “Family Policies: Lithuania (2015),” Population Europe Resource Finder & Archive, 2015
by Andre Coelho | Feb 12, 2018 | News, Research
Ville-Veikko Pulkka
Although an experiment on basic income is being performed in Finland at the moment (being expected to end by January 2019), this does not say much about what Finns think about it, or about basic income in general. According to recent research developed by Ville-Veikko Pulkka, a doctoral researcher at the University of Helsinki, not only does survey methodology deeply affect people’s responses, but current beliefs and views of society by Finnish citizens are also such that “there is no need for a paradigm shift”.
Ville-Veikko and his colleague Professor Heikki Hiilamo ran another survey in late 2017, arguing that other surveys on basic income in Finland such as Center party’s think tank e2 in 2015, Finnish Social Insurance Institution (Kela) in 2015, and Finnish Business and Policy Forum EVA in 2017 skewed results due to different ways of defining and framing basic income, with support ranging from 39 up to 79%. These researchers view their survey as “a more realistic view on basic income’s support in Finland”, having it based on the Basic Income Earth Network (BIEN) definition. They also explicitly referred the basic income net level of 560 €/month, which is around as much as many basic social benefits in Finland.
Ville-Veikko and Professor Hiilamo have found that the partial basic income of 560 €/month currently being tested in Finland is actually the most supported one among several basic income options (partial(1) with more or less than 560 €/month, full(1) with 1000 or 1500 €/month), with 51% of respondents saying it is a “good idea” (20% being undecided and 21% firmly considering it a bad idea). Significantly, of the surveyed income schemes, the most supported one was “participation income” (78% of supporters) which is not a basic income by definition.
This survey also showed that the younger the respondents (around 1000 in total), the more support the basic income proposal (the one cited above) receives – 72% under 24 years of age, down to 42% for people over 65. Occupation also seems to have a strong influence, with students showing 69% of support for basic income and entrepreneurs only 38%. For relatively obvious reasons, the unemployed and part-time employed were also more in support of the idea (68 and 61% respectively).
The new survey by Ville-Veikko and Professor Hiilamo comes at a time when it becomes clear that the Finnish government’s path is not to break from “the activation policies implemented since the 1990s”. This has been shown through the recent implementation of a tighter work activation model, aimed at the unemployed, which brings more conditionality and sanctions into the system. This is, apparently, contrary to the basic income spirit of unconditionality and, on top of that, the government is already considering tightening up unemployment benefits even further.
From the referred survey and recent Finnish government moves toward activation policies, it seems clear that running an experiment on basic income does not equate to leading the way towards the implementation of this policy. According to Ville-Veikko, basic income in Finland is likely to receive more support if only unemployment and work precarity rises significantly in the near future, which is uncertain even given the latest studies on the subject. It also becomes clear that the public remains polarized regarding social policies for the future: on the one hand there is moderate support for basic income, and on the other hand there is clear support for activation measures such as the “participation income”.
Notes:
1 – here, “partial” refers to receiving the stipend and maintaining eligibility for housing allowance and earnings-related benefits, and “full” refers to losing eligibility to those same benefits.
More information at:
Kate McFarland, “FINLAND: First Results from Pilot Study? Not Exactly”, Basic Income News, May 10th 2017
“New model to activate unemployed comes into effect amid rising criticism”, YLE, 26th December 2017
“Finnish government plan for jobless: Apply for work weekly – or lose benefits”, YLE, 10th January 2018
Micah Kaats, “International: McKinsey report identifies basic income as a potential response to automation”, Basic Income News, 16th January 2018
by Kate McFarland | Feb 4, 2018 | Opinion
My interest in basic income stemmed from the conjecture that such a policy could help to ignite a progression away from the culture of total work. However, there are many open empirical questions regarding the exact way in which a basic income would (or would not) influence work-related attitudes and behaviors.
One might hope that current and planned experiments will shed some light on this topic. My claim in this article is that this is not likely to be the case: the impact of basic income on work-related attitudes and behaviors is not readily amenable to experimentation.
1. Fixing the Viewpoint: Opposition to the Culture of Work
When I began casually following the basic income movement in 2015, and when I began volunteering for Basic Income News in November of that year, I was tentatively attracted to the policy as a means to subsidize lifestyles like downshifting and what I’d come to call anti-careerism – the rejection of idea that one’s life course should be structured and defined by a career path.
At that time, I was unaware of the movement’s budding interest in experimentation. I did not realize that the center-right federal government of Finland was about to declare its intention to fund an experimental trial of basic income, or that the provincial government of Ontario was also preparing to design and implement a trial of guaranteed minimum income.
I did not foresee the global surge of interest in experiments and pilot studies that would happen soon after the commencement of my volunteership. But happen it did, and thus, as a writer for Basic Income News, I was committed to expend considerable effort covering the current basic income implementation trials. Moreover, as a “just the facts” news reporter, it was my duty to report on them without allowing my own personal misgivings to show through (although I did have occasion to leak my skepticism in the Op-Ed section). As a result, I was often mistaken for someone with a genuine and favorable interest in basic income experiments.
Through it all, my main interest in basic income remained the conjecture that the policy might act as a subsidy for downshifting, anti-careerism, and working without pay, and thereby help to displace society’s overvaluing of selling labor for money. While such an “anti-work” approach to basic income is highly controversial, I will assume this perspective throughout the present article. (Those who do not share it may either accept it for the sake of argument or stop reading.)
Such an approach to basic income rests on untested empirical conjectures. In fact, however, many questions remain open. Would individuals living in a society with basic income come to hold different views about the role and importance of jobs? Would they fail to view an occupation or career as integral to self-identity? Would they deny that a high salary or professional advancement is essential for personal success? Would they ascribe greater value to self-development and social contributions that occur outside of paid work? Would they tend to prioritize activities that are rewarding in themselves over activities that contribute to professionalization and employability? To what extent would basic income actually enable people to lead lives without full-time or continuous jobs? It is sufficient to empower individuals to work fewer hours? (Probably not.) Would it permit some to withdraw from the labor market completely?
Some proponents take for granted that basic income would usher in a society in which the pursuit of passions is more important than paid work. Such optimistic predictions, however, must be moderated against the reality that the culture of work is deeply entrenched. When critics contend that it’s premature to “give up” on the goal of full employment, the normative assumptions behind their rhetoric should not be ignored: secure full-time jobs and careers remain central to the identity and self-worth of many who have them, and central to the goals and aspirations of many who don’t. Even more unsettlingly (in my view), many supporters enthusiastically maintain that basic income would not result in lower rates of employment–and might even increase work effort (as is the hypothesis behind Finland’s experiment, which is designed primarily to assess whether unemployed individuals would be more likely to accept work if their benefits were made unconditional). Some argue that it would act as a stimulus to business and grow the economy, never pausing to question the ethos of paid work and productivity.
We simply don’t know the long-term effects of basic income on work-related attitudes and behaviors. Given the myriad of unanswered empirical questions, one might guess that I would have been heartened to witness the unexpected onslaught of experiments that occurred during my volunteership with Basic Income News. But I was not: unfortunately, it is unlikely that the present wave of experiments will yield insight into the empirical concerns that interest me and others who approach basic income from the “anti-work” perspective.
2. Five Limitations of Experiments
I believe it’s possible that basic income could precipitate a mass transformation of work-related behavior and attitudes but, if so, it most likely occur through long-term, society-wide processes. Experiments, in contrast, are necessarily (1) limited in duration and (2) restricted to a subset of the population (rather than “universal”).
And experiments have other shortcomings. For instance, they must be (3) designed to prevent subjects from being financially worse off as a result of participation, whereas any “real-world” UBI would almost certainly be introduced in tandem with a funding mechanism that causes some individuals to be net payees. Finally, as existing experiments have been designed, the target populations (4) consist of low-income individuals, the unemployed, and/or welfare recipients, and (5) consist mainly of adults who have already been acculturated into the present society and its ethos of work and consumption.
2.1 Experiments are limited in duration.
Most of the current BI-related experiments are two or three years in length. In the United States, the non-profit YC Research plans to launch an experiment in which some participants receive cash transfers for five years. The only projects of longer duration are taking place in developing nations: GiveDirectly is providing a 12-year basic income to 40 villages in its major experiment in Kenya, and the Brazilian non-profit organization ReCivitas has introduced a “lifetime basic income” in the village Quatinga Velho (note that the latter is not an “experiment” in the scientific sense). Even if longer term experiments were affordable, the pressure to obtain results would generally militate against them.
The short-term nature of experiments poses at least two major shortcomings vis-à-vis our present interests:
First, the payments’ limited duration disincentivizes financially risky behavior, such as abandoning a job or career. We should expect that few individuals would choose to make radical changes to their work and life if they are guaranteed unconditional cash payments for only two or three years. A two- or three-year gap in employment might jeopardize not only one’s ability to return to one’s former job or career path but also one’s general future prospects in the labor market.
Secondly, let’s assume that some participants do radically alter their workforce participation despite the short-term nature of the experiment (e.g. they might use the money to help provide financial security during the process of downshifting from a lucrative full-time job, with the confidence that the experiment’s timeframe is long enough to permit them to settle into stable part-time employment or freelance work). Under a society-wide and permanent basic income, such “first movers” might inspire others also to seek alternatives to the norm of full-time permanent employment, initiating a sort of ripple effect whereby downshifting and other such alternative lifestyles gain in practice and acceptance. A two- or three-year experiment, however, is unlikely to be long enough to observe these more slowly accruing effects on social attitudes toward work.
Stated otherwise: a basic income might enable some individuals to voluntarily accept less money pay through work, reduce their time in the labor market, or even cease employment entirely (especially in the many non-USA nations in which benefits such as healthcare are not dependent on full-time employment). It might, for example, liberate those who had already been keen to adopt such a lifestyle (say, downshifting) but were restrained by, and only by, the lack of a stable financial safety net. Meanwhile, however, other would-be downshifters might remain hesitant. The latter group might include, for instance, those who have been held back by not only financial anxiety but also fear of social marginalization. Over time, however, an increased prevalence and visibility of downshifting could increase the lifestyle’s social acceptability, thereby reducing its stigmatization and rendering more attractive to more people (which would further increase its visibility and social acceptance, and so on).
Of course, this is purely speculative. Even if a basic income were to bring about increase in the number and visibility of downshifters (which itself is uncertain), this might lead not to social acceptance but to angry complaints about “parasitism” and further stigmatization. But the point is just that experiments are unlikely to reveal which outcome would transpire.
Indeed, moreover, some of the effects basic income on social attitudes toward work might develop over generations. Perhaps children and teens would develop less material-driven aspirations if they were to grow up in a society in which basic material security is taken for granted; perhaps they would place less weight on monetary considerations when choosing work or other projects and pursuits. Perhaps they would not internalize the moral imperative that one must “earn a living” through paid labor. Perhaps it would merely seem intuitive to them to conceptualize work and income as independent. Perhaps, in turn, they would conceive of the value of work in terms other than income, such as the good it brings to the world and the satisfaction it provides to the worker. Views that are counternormative in our own society might come naturally to those raised in world with universal basic income…
But we certainly can’t be confident about any of that, and experiments will not help.
2.2 Experiments are not “universal” in scope.
As I have written elsewhere, a bigger question than “What would you do if your income were taken care of?” is “What would you do if everyone’s income were taken care of?” What a financially self-sufficient individual would choose to do in a society of full-time workers is not necessarily identical to what that same financially self-sufficient individual would choose to do in a society in which everyone could afford to live without a job.
Experiments require a control group. This effectively prevents an experimental test of a truly universal basic income. Now, to be sure, some experiments do aim to include universality in their design. In GiveDirectly’s experiment, for example, the experimental units are not individual people but entire villages. In this major study, the treatment groups are each composed of communities in which all individuals are receiving unconditional cash transfers. An earlier experiment in the Indian state of Madhya Pradesh also implemented a basic income in several villages, using similar villages as controls. There is even precedent in the developed world: the much-discussed “Mincome” experiment, a negative income tax experiment conducted in Manitoba in the 1970s, used the town of Dauphin as a saturation site; every resident of Dauphin was unconditionally guaranteed a minimum income from 1974 to 1979, when the experiment was terminated.
No current experiment in the developed world, however, includes the use of a saturation site (even though Hugh Segal, the adviser to the Ontario pilot study, initially recommended it). In Finland, the experimental group consists of a random sample of 2,000 individuals who had previously been receiving federal unemployment benefits. Similarly, in the Dutch municipal experiments, participants have been randomly selected from current welfare beneficiaries residing in the respective cities, and Barcelona’s experiment involves a stratified sample of welfare recipients within one of the city’s most impoverished neighborhoods. In Ontario, experimental groups will be randomly selected from self-selected applicants, where eligible applicants are restricted to low-income individuals from three specific regions of the province. And YC Research has designed its experiment as a randomized controlled trial with a target population of low-income young adults in two regions of the US. (See this summary for more information on the design of the experiments.)
A consequence of these design decisions is that all of the above experiments will fail to capture social multiplier effects. For an example of social multiplier effects in the context of minimum income experiments, consider one of the most striking results from Dauphin: an increase in high school graduation rates. Last year, I attended a talk by Evelyn Forget, the scholar responsible for the analysis of the experiment, wherein she described survey data that revealed that the decisions of Dauphin teens to remain in school were due not only to the financial security of their individual families but also to the fact that their peers were able to stay in school as well.
We should expect that work-related behavior could also be susceptible to social multiplier effects. Like teenagers’ decisions to stay in school, adults’ decisions to withdraw from full-time employment might depend not only on their personal financial status but also on the actions of their peers. An individual with a personal source of passive income might be financially able to quit her job, and even desire to do so, but nonetheless choose to remain employed if – and because – her friends and coworkers stay in their jobs. She might, for example, believe that she would become socially isolated if she were to opt out of work while her peers remained in full-time employment. She might think about her lack of friends available before 5 pm on weekdays, or she might feel pressure to continue to earn enough money to continue to engage in costly dining, entertainment, and other activities with friends who remain lucratively employed. She might fear a lack of sympathy or understanding, even ostracism, if she were to become the only person within her peer group to abandon traditional employment.
Furthermore, as discussed above, the potential impact of basic income is not limited to the liberation of those who already desire to downshift; another possibility is that, through social multiplier effects, a basic income could generate this desire in those who had not previously considered the option. Our attitudes and aspirations are also influenced not only by our private circumstances but also by our observations of others’ choices lifestyles, and by our perception of what is socially acceptable. Some who now lack any interest in downshifting might develop one in the face of social or structural changes that legitimate or popularize the lifestyle.
Even experiments with saturation sites would be insufficient to permit us to assess all of these potential effects; the social, cultural, and economic forces that impinge on work-related attitudes and behavior vastly exceed the local scale.
2.3 Experiments exclude net contributors.
A “real world” basic income would almost certainly be introduced in conjunction with tax increases to help to finance the program, which would likely include higher income taxes on top earners. But researchers cannot ethically introduce manipulations that leave some subjects worse off as a result of the experiment. Consequently, tax increases cannot be part of experimental trials. This limits the ability to test how the full policy package would affect work-related behaviors. Even those that have studied taxes and come from financial education backgrounds such as through Northeastern University wouldn’t be able to test how different experiments could affect society and financial systems.
For one, it’s not basic income per se but redistribution – reduction of inequality – that carries the greater potential to curb the demand for positional goods. As mentioned above, a worker might hesitate to downshift if the maintenance of social relationships requires engagement in costly dining, drinking, entertainment, or luxury holidays. In a society with high inequality, a mere basic income might do little to reduce the demand for positional goods, limiting the temptation to downshift or opt out of paid work to live on a subsistence income. Many might continue to feel the need to wear nice clothing, drive a new car, and live in an affluent neighborhood to be taken seriously in society, and thus might continue to prefer greater earnings to greater leisure, despite the possibilities opened by the introduction of a basic income. Conversely, the less that one perceives one’s social status to depend on spending and consumption, the more one might be inclined to trade higher earnings for more leisure time. Policies that mitigate financial inequality, such as progressive taxes on wealth and income, help to address this barrier to downshifting.
Additionally, policies that stymie the ability to become “filthy rich” might discourage those who would otherwise be inclined to choose jobs and careers based primarily on their prospects for financial gain. Sufficiently high income taxes could reduce the role of monetary incentives in selecting work. Limitations on wealth acquisition might push some would-be profiteers to instead seek work that they could find non-monetarily rewarding.
Such effects could enhance the ability of a “basic income plus tax reform” package to transform work-related attitudes and behavior; however, they are bound to be missed in experiments.
2.4 Existing experiments are restricted to low-income populations.
So far, we have focused on limitations that are destined to afflict all basic income experiments, merely in virtue of the nature of experiments. Let’s now turn to a contingent design decision that constrains all current experiments in developed nations: in each experiment, as mentioned above, the target population contains only individuals who are low-income and/or receiving social assistance or unemployment benefits or other benefits or with incomes falling below a certain level.
To be fair, none of the existing experiments have been inspired by questions like “Can basic income provide a subsidy for downshifting?” or “Would basic income promote the acceptance and desirability of lifestyles outside of full-time employment?” On the contrary, most are motivated by the desire to determine whether unconditional cash transfers would be more effective than existing programs in addressing poverty or unemployment. In this light, these choices of target populations seem reasonable. But these choices make the experiments less congenial to the questions of those who are interested in the ability of basic income to facilitate a reduction in paid work.
A test of a policy’s potential to foster downshifting only makes sense if experimental subjects are drawn from a population of people who have the potential to downshift, and “downshifting” typically implies a reasonably well-paying position from which one shifts down. Thus, for an experiment to address our key interests, the target population should encompass individuals who are currently employed in relatively well-paying jobs. An experiment limited to the unemployed will tell us little about a policy’s ability to promote voluntary reduction of working hours. An experiment limited to the poor will tell us little about a policy’s ability to promote voluntary reduction of earnings and consumption.
The inclusion of “successful” workers among test subject is also important with respect to the question of whether basic income would reduce the stigma associated with the receipt of public benefits or, more precisely, voluntary “benefit scrounging” (which is, in essence, just a pejorative term for what I’ve been politely describing as “using a basic income to subsidize downshifting”). Quite likely, the “scrounging stigma” is too strong to disappear during the course of a short-term experiment in any case. If a basic income were to play a role in reducing the stigma, however, it would almost certainly not be by allowing poor and unemployed individuals to live upon government subsidies while they voluntarily opt out of the search for full-time jobs. Unfortunately, such an outcome (however desirable) seems much more likely to feed existing stigmas and stereotypes than to combat them.
In contrast, basic income might have a greater and more favorable cultural impact if it subsidized downshifting among individuals in relatively well-paying jobs and promising career paths – among those, that is, who embody conventional images of success. Society accords respect and admiration to those in lucrative careers, which makes such individuals uniquely well-positioned to attract curiosity, perhaps even sympathy, if they were to spurn the life of traditional employment and choose to rely upon government monies to meet their basic expenses (which is not to say that they would not also elicit the scorn or many others). Admittedly, the idea that basic income could lessen the stigma of “benefits scrounging” is far-fetched. The point at hand, however, is simply that existing experiments are not designed in a way that can adequately illuminate how far-fetched.
2.5 Experimental subjects have already “come of age” in the culture of work.
Each of the existing experiments is focused on effects on adults who have already been acculturated into the dominant work ethic. It is possible, however, that some of the social and cultural effects about basic income would result from its influence on younger generations. Perhaps teenagers would internalize different attitudes toward work if they were to come of age under an unconditional guarantee of financial security – not necessarily taking for granted that a core defining features of “adulting” is to find employment at a full-time job in order to earn a living. Perhaps young adults would formulate different personal goals and ideals of success if they did not face an immediate need to earn money through a job.
In a past feature article for Basic Income News, I speculated that entering adulthood with a work-independent college stipend – which shared some commonalities to a five-year “basic income” – could have played a large role in solidifying my own rejection of the ethic of (paid) work. For example, by allowing me to continue to dedicate myself to schoolwork without worrying about paid work, it might have helped to “prevent me from unlearning” that the fact that an activity is unpaid does not imply that the activity is not worthwhile, rewarding, or hard work – or that it’s not the best use of one’s time.
To some extent, this is just to repeat the point that experiments are too limited in duration to capture multi-generational effects of a policy. In principle, though, one could design a short-term study to test the effects of a guaranteed income on a cohort of young adults at critical transitional phases, such as leaving home for college or leaving college for “the real world” (i.e., usually, either a job or the search for one). But existing experiments are not this.
3. Concluding Remarks
In conclusion, then, I expect the current wave of experiments to shed little light on the question of whether, or to what extent, basic income would promote a cultural shift towards a decreased valuation of paid work. Any apparent evidence that basic income would not have such an effect (e.g. a lack of observed change in workforce participation or self-reported attitudes toward work) could be explained as an artifact of the limitations of experimental design.
Arguably, however, the biggest problem with experiments is not that they most likely won’t show considerable reduction in workforce participation (and yet for reasons that are inconclusive) but that many of the policy’s own proponents don’t want them to. When committed supporters of basic income demand more experiments, as often happens these days, they aren’t doing so because they want to decide for themselves whether to endorse the policy; they already have. The hope, generally, is that experiments would produce results that allay the fears of skeptical policymakers, such as the commonplace “fear” that basic income would cause a decrease in workforce participation. As many supporters are fond of pointing out, previous experiments have not shown a marked decrease in workforce participation, or have shown a decrease only within population segments where reducing work hours is socially acceptable (e.g. school-age teenagers or mothers of young children). This attitude toward basic income experiments only recapitulates society’s overvaluation of paid work.
The policymakers who assess experiments for “failure” or “success” will do so relative to the norms and values of the status quo. Political speeches and media reports are likely to portray any observed decrease in labor force participation as evidence of the failure of the policy, as happened when a negative income tax was tested in several cities in the United States in the late 1960s and 70s. My impression, based on two years of intense work in the basic income movement, is that many supporters realize this but call for experiments nonetheless, believing that the trials will in fact yield outcomes that are “successful” relative to the norms and values of the status quo.
Hence, in addition to being unlikely to produce interesting or useful results, basic income experiments may also threaten to reinforce these norms and values in the minds of advocates and other readers. And, from the standpoint as critic of the culture of work, this is not only unhelpful but dangerous.
Photo: banned :: The Golden Book of Chemistry Experiments CC BY-NC 2.0
