by Karl Widerquist | Nov 26, 2017 | Opinion, The Indepentarian
This post is one of several previewing the book I’m writing on Universal Basic Income (UBI) experiments, and it is the second of two reviewing the five Negative Income Tax (NIT) experiments conducted by the U.S. and Canadian Government in the 1970s. This post draws heavily on my earlier work, “A Failure to Communicate: What (if anything) Can We Learn from the Negative Income Tax Experiments.”
Last week I argued that the results from the NIT experiments for various quality-of-life indicators were substantial and encouraging and that the labor-market effects implied that the policy was affordable. As promising as the results were to the researchers involved the NIT experiments, they were seriously misunderstood in the public discussion at the time. But the discussion in Congress and in the popular media displayed little understanding of the complexity. The results were spun or misunderstood and used in simplistic arguments to reject NIT or any form of guaranteed income offhand.
The experiments were of most interest to Congress and the media during the period from 1970 to 1972, when President Nixon’s Family Assistance Plan (FAP), which had some elements of an NIT, was under debate in Congress. None of the experiments were ready to release final reports at the time. Congress insisted researchers produce some kind of preliminary report, and then members of Congress criticized the report for being “premature,” which was just what the researchers had initially warned.[i]
Results of the fourth and largest experiment, SIME/DIME, were released while Congress was debating a policy proposed by President Carter, which had already moved quite a way from the NIT model. Dozens of technical reports with large amounts of data were simplified down to two statements: It decreased work effort and it supposedly increased divorce. The smallness of the work disincentive effect hardly drew any attention. Although researchers going into the experiments agreed that there would be some work disincentive effect and were pleased to find it was small enough to make the program affordable, many members of Congress and popular media commentators acted as if the mere existence of a work disincentive effect was enough to disqualify the program. The public discussion displayed little, if any, understanding that the 5%-to-7.9% difference between the control and experimental groups is not a prediction of the national response. Nonacademic articles reviewed by one of the authors[ii] showed little or no understanding that the response was expected to be much smaller as a percentage of the entire population, that it could potentially be counteracted by the availability of good jobs, or that it could be the first step necessary for workers to command higher wages and better working conditions.
The United Press International simply got the facts wrong, saying that the SIME/DIME study showed that “adults might abandon efforts to find work.” The UPI apparently did not understand the difference between increasing search time and completely abandoning the labor market. The Rocky Mountain News claimed that the NIT “saps the recipients’ desire to work.” The Seattle Times presented a relatively well-rounded understanding of the results, but despite this, simply concluded that the existence of a decline in work effort was enough to “cast doubt” on the plan. Others went even farther, saying that the existence of a work disincentive effect was enough to declare the experiments a failure. Headlines such as “Income Plan Linked to Less Work” and “Guaranteed Income Against Work Ethic” appeared in newspapers following the hearings. Only a few exceptions such as Carl Rowan for the Washington Star (1978) considered that it might be acceptable for people working in bad jobs to work less, but he could not figure out why the government would spend so much money to find out whether people work less when you pay them to stay home.[iii]
Senator Daniel Patrick Moynihan, who was one of the few social scientists in the Senate, wrote, “But were we wrong about a guaranteed income! Seemingly it is calamitous. It increases family dissolution by some 70 percent, decreases work, etc. Such is now the state of the science, and it seems to me we are honor bound to abide by it for the moment.” Senator Bill Armstrong of Colorado, mentioning only the existence of a work-disincentive effect, declared the NIT, “An acknowledged failure,” writing, “Let’s admit it, learn from it, and move on.”[iv]
Robert Spiegelman, one of the directors of SIME/DIME, defended the experiments, writing that they provided much-needed cost estimates that demonstrated the feasibility of the NIT. He said that the decline in work effort was not dramatic, and could not understand why so many commentators drew such different conclusions than the experimenters. Gary Burtless (1986) remarked, “Policymakers and policy analysts … seem far more impressed by our certainty that the effective price of redistribution is positive than they are by the equally persuasive evidence that the price is small.”[v]
This public discussion certainly displayed “a failure to communicate.” The experiments produced a great deal of useful evidence, but for by-far the greatest part, it failed to raise the level of debate either in Congress or in public forums. The literature review reveals neither supporter nor opponents who appeared to have a better understanding of the likely effects of the NIT and UBI in the discussions following the release of the results of the experiments in the 1970s.[vi]
Whatever the causes for it, an environment with a low understanding of complexity is highly vulnerable to spin with simplistic if nearly vacuous interpretation. All sides spin, but in the late 1970s NIT debate, only one side showed up. The guaranteed income movement that had been so active in the United States at the beginning of the decade had declined to the point that it was able to provide little or no counter-spin to the enormously negative discussion of the experimental results in the popular media.
Whether the low information content of the discussion in the media resulted more from spin, sensationalism, or honest misunderstanding is hard to determine. But whatever the reasons, the low-information discussion of the experimental results put the NIT (and, in hindsight, UBI by proxy) in an extremely unfavorable light, when the scientific results were mixed-to-favorable.
The scientists who presented the data are not entirely to blame for this misunderstanding. Neither can all of it be blamed on spin, sound bites, sensationalism, conscious desire to make an oversimplified judgment, or the failure of reports to do their homework. Nor can all of it be blamed on the people involved in political debates not paying sufficient attention. It is inherently easier to understand an oversimplification than it is to understand the genuine complexity that scientific research usually involves no matter how painstakingly it is presented. It may be impossible to communicate the complexities to most nonspecialists readers in the time a reasonable person to devote to the issue.
Nevertheless, everyone needs to try to do better next time. And we can do better. Results from experiments in conducted in Namibia and India in the early 2010s and late ’00s were much better understood, as resulted from Canada’s Mincome experiment that sadly did not come out until more than two decades after that experiment was concluded.
The book I’m working on is an effort to help reduce misunderstandings with future experiments. It is aimed at a wide audience because it focuses the problem of communication from specialists to non-specialists. I hope to help researchers involved in current and future experiments design and report their findings in ways that are more likely to raise the level of debate; to help researchers not involved in the experiments raise the level of discussion when they write about the findings of the experiment, to help journalists understand and report experimental findings more accurately; and to help interested citizens of all political predispositions see beyond any possible spin and media misinterpretations to the complexities of the results of this next round of experiments—whatever they turn out to be.
[i] Widerquist, 2005.
[ii] Widerquist, 2005.
[iii] Widerquist, 2005.
[iv] Widerquist, 2005.
[v] Burtless, 1986.
[vi] Widerquist, 2005.
by Hilde Latour | Nov 26, 2017 | News
On November 14th 2017, Antoinette Hertsenberg (from the Dutch television program Radar) handed over a petition to the Dutch Parliament (signed by 113.344 people), asking for an experiment with a basic income for people over 55 years old who are unemployed.
The petition was started after Radar called attention to the fact that only 3% of the unemployed 55+ have a chance to find a paid job in the Netherlands, 6 months ago.
The handing over of the petition was a large event; many members of Parliament were present, representing almost all political parties. In reaction to the petition, the Socialist Party (SP) asked for a debate in Parliament on the topic, in contrast to what happened in the preceding year, in which a debate about another petition on basic income was refused.
A lot of media attention was given to the petition, reigniting discussion on basic income in the Netherlands.
More info:
Pedro Alves, “Netherlands: Basic Income petition in the Netherlands for people over 55 years old was signed more than 50000 times“, Basic Income News, July 6th 2017
by Sara Bizarro | Nov 18, 2017 | News
Peter S. Goodman, a veteran economics journalist, wrote a comprehensive piece about the recent Basic Income developments for the New York Times. In this piece, Goodman refers to the main motivations behind the idea of Basic Income as including the current wage stagnation, the lack of jobs to support the middle class and the threat of automation. The idea, Goodman says, is “gaining traction in many countries as a proposal to soften the edges of capitalism.” Basic Income can be use to insure “food and shelter for all, while removing the stigma of public support.”
The article also refers to several Basic Income experiments currently underway. In Europe, the article includes the experiments in Finland, Netherlands and Barcelona. In the USA, the article mentions the experiments being prepared in Oakland and Stockton, CA. Also mentioned are the Canadian experiment in Ontario and the experiment in Kenya organized by Give Directly.
Regarding how to finance Basic Income, Goodman says that the cost of Basic Income is a simple multiplication of amount of money distributed by the amount of people. He says: “Give every American $10,000 a year — a sum still below the poverty line for an individual — and the tab runs to $3 trillion a year. That is about eight times what the United States now spends on social service programs. Conversation over.” This argument however, has been challenged by several Basic Income researchers, including Karl Widerquist, who is was interviewed and quoted in the piece. In his paper “The Cost of Basic Income: Back-of-the-Envelope Calculations”, Widerquist says that the cost of Basic Income is “is often misunderstood and greatly exaggerated.” In the paper, Widerquist argues that a Basic Income of “$12,000 per adult and $6,000 per child with a 50% marginal tax rate” would cost “$539 billion per year: about one-sixth its often-mentioned but not-very-meaningful gross cost of about $3.415 trillion.“
Beyond the issue of financing, the article covers a lot of ground regarding current discussion of Basic Income and its motivation, as compared to other social security schemes. Goodman refers to the bureaucracy of social support and the poverty trap, when “people living on benefits risk losing support if they secure other income” and the idea that “poor people are better placed than bureaucrats to determine the most beneficial use of aid money.” The article also refers to the left wing worry that Basic Income could be an excuse to cut social programs, “given that the American social safety programs have been significantly trimmed in recent decades.”
The piece closes with an acknowledgement that Basic Income “appears to have found its moment” and a quote by Guy Standing, saying that, “The interest is exploding everywhere, and the debates now are extraordinarily fertile.”
More information:
Peter S. Goodman, “Capitalism Has a Problem. Is Free Money the Answer?”, New York Times, November 15, 2017
by Andre Coelho | Nov 16, 2017 | News
Íñigo Errejón, at the 7th Basic Income Simposium.
On the 2nd of November 2017, the city of Zaragoza (Spain) welcomed the 17th Basic Income Simposium, organized by Red Renta Básica (the Basic Income Network affiliate in Spain), which lasted for three days.
In the first day, during the afternoon, the documentary “In the same boat” (trailer here) was screened, followed by interventions by David Casassas (Social Theory professor at the University of Barcelona and member of Red Renta Básica), who explained the normative and technical aspects of basic income, Txema Sánchez (member of Red Renta Básica and the Nulla Política Sina Éthica collective) and Rudy Gnutti (“In the same boat” film director), who claims there is no Left nor Right basic income.
On the second day, the meeting started with a roundtable on how to finance a basic income. This was moderated by Fernando Rivares (from the Zaragosa municipality) and debated by Jordi Arcarons (PhD in Applied Economics at the University of Barcelona), Lluís Torrens (Director of Social Rights Planning and Innovation of the Barcelona municipality), alongside Raúl Burrillo and Jorge Bielsa Callau (Economy professor at the University of Zaragosa). Although it has been shown that a basic income can be financed for the Spanish reality, the financing problem has been a widely debated issue. In the afternoon, Pablo Yanes (CEPAL research coordinator in Mexico) presented his take on what has been developing as the basic income inclusion in the Mexico City Constitution.
On a second roundtable, moderated by Violeta Barba (Aragón Congress president), Daniel Raventós (PhD in Economic Sciences and president of Red Renta Básica), Íñigo Errejón (PhD in Political Science and Congressman for Unidos Podemos political party), Amparo Bella (historian, feminist and Congresswoman at Aragón by the Podemos political party) and Pedro Santisteve (from the Zaragosa municipality) debated around the bold theme “unconditional basic income”. At this moment, Santisteve approaches basic income from a constitutional right perspective. According to him, these rights shall be “locked” inside the constitution, so they cannot be tramped with by any one government. Amparo Bella then introduced basic income under a feminist perspective. This way, basic income shall value all kinds of labour, stressing that work is much more than a job. In his turn, Íñigo defended the upgrade of the welfare state, where basic income shall be the backbone of the needed constitutional reform. Finally, Raventós has pointed out that knowing about the basic income proposal is a crucial step towards supporting it, and that no one can really be free unless he or she has their material needs met.
On the last day, in the morning, the last roundtable took place. This was named “30 years of minimum income: the alternative, basic income”. The discussion then circulated around the failure to eradicate poverty through these (conditional) minimum income schemes, and around the possible alternatives. The debate was moderated by Luisa Broto (from the Zaragosa municipality Social Services) and had the presentations of Mari Carmen Mesa (Spokeswoman to Aragón Social Workers union), Sonia García (CCOO Social Action Secretary) and Julen Bollain (Euskadi Congressman and Red Renta Básica member). Mar Carmen started by showing reservations about the implementation of the basic income scheme in the short term. In the same vein, Sonia García rejected basic income in favour of a (conditional) minimum income scheme (of 430 €/month) which has been presented to the Spanish Congress by CCOO and UGT. However, Bollain argued that in fact conditional minimum income schemes have failed all around the world in the last few decades. He claimed that none of such schemes ever eradicated poverty, but still introduced unnecessary stigma, bureaucracy and administrative costs. He thinks that society must overcome these targeted, conditional policies and fight for the universal, unconditional rights that basic income represents.
More information at:
Jullen Bollain, “El XVII simposio de la Red Renta Básica: ¿punto de inflexión? [The 17th Red Renta Básica Simposium: an inflection point?]”, Red Renta Básica, November 12th 2017
by Karl Widerquist | Nov 15, 2017 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in December 2001.
As I was putting this newsletter together, the National Bureau of Economic Research officially announced that the U.S. economy has been in recession since last March. The delay in the diagnosis is nothing unusual because a downturn is not considered a recession unless it lasts for a significant period of time. But the point at which a recession is recognized is a good moment for reflection on the performance of the economy. Even though the United States is in a recession right now, the long-term performance of the economy as a whole over the last 20 years has been quite good. The expansion that ended in March lasted for exactly 10-years—the longest in U.S. history—and it came after a short and mild recession in the early 1990s, which followed a long, stable expansion during the 1980s. The last 20 years have had the most stable growth in U.S. economic history. The growth was not particularly rapid, but there is a lot to be said for stability. The economy may decline by a few percentage points over the course of the recession, but an economy that grows by 2 or 3 per year during economic expansions can weather the occasional downturn. Thus, although there are worrying signs on the horizon (such as a persistent trade deficit and a high and growing level of indebtedness), the verdict on the performance of the U.S. economy as a whole over the last 20 years has to be largely positive.
Good performance of the economy as a whole does not necessarily mean that it has performed well for all individuals. If one judges the success of an economy by the well being of its less advantaged individuals the performance of the U.S. economy has been terrible over the last 20 years. Real wages at the low-end of the wage spectrum have stagnated or even declined slightly. Usually, poverty declines slowly during expansions and increases quickly in recessions, but there has been no lasting progress in reducing poverty since the early 1970s. The official poverty rate has been stuck in a range between 11% and 15% since the early 1970s. There was an extremely rapid decline in poverty in the 1940s and again in the 1960s, but it has not been repeated since. The ’40s, ’50s, and ’60s were marred by frequent recessions, but individuals across the economic spectrum were able to count on gains during the expansions that would more than make up for losses during recessions. The ’70s were a period of instability in which the less advantaged lost ground, and since then there has been no return to the progress experienced earlier.
Why were the experiences of the less advantaged so different during the good economic times of the ’80s and ’90s than they were in the ’40s, ’50s, and ’60s? The difference is largely one of government policy. The earlier period saw the GI Bill, the fruition of Social Security, the expansion of AFDC and Medicare, increases in the minimum wage and the creation of Food Stamps and Medicaid. Since the early 1970s, many of these programs have been canceled or allowed to lapse or have been effectively cut by not being adjusted for inflation. These programs were not the best possible programs for fighting poverty, but they were all we had, and rather than being reformed, they’ve largely been cut with little or nothing to replace them aside from TANF, which seems to make welfare so unpleasant that jobs without living wages are preferable. TANF has been declared a success simply because it has reduced the number of families on welfare. The success of TANF should be measured instead by whether it reduces poverty and whether it makes children healthier and happier and whether it helps them grow into better-adjusted adults. Should it be any surprise cutting nearly every program designed to aid the poor should slow or stop the progress we had been making toward the reduction of poverty? Something else is needed if poverty reduction is our goal.
During recessions, people often voice opposition to direct anti-poverty policies, arguing that the best way to help people is to get the economy moving again. During expansions, the argument is usually to keep it moving or to get it moving faster. They say, “a rising tide lifts all boats,” and everyone benefits from economic growth. But the lesson to learn from the last twenty years of economic expansion is that these arguments are simply false. The incomes of low-wage workers stagnated during the good economic times of the ’80s and ’90s because policy turned against the redistribution of income, but they increased during the good economic times of ’40s, ’50s, and ’60s because policy favored increased redistribution of income. There is no inherent mechanism in a capitalist economy to ensure that everyone will share in the fruits of economic growth. I believe that a basic income guarantee is essential to ensure that everyone shares in our economic success. This and other strategies for better distributional equity will be discussed at the First Congress of the U.S. Basic Income Guarantee Network. I invite you to join us.
Karl Widerquist, New York, NY, December 2001.
