by Sara Bizarro | Sep 10, 2017 | News
On August 29, 2017, the Roosevelt Institute released a report where researchers Michalis Nikiforos, Marshall Steinbaum, Gennaro Zezza model the macroeconomic effects of implementing Basic Income. (Marshall Steinbaum is a Research Director and a Fellow at the Roosevelt Institute. Michalis Nikiforos and Gennaro Zezza are both associated with the Levy Institute.)
The Roosevelt Institute, following the legacy of Franklin and Eleanor Roosevelt, presents itself as re-imagining “America as it should be: a place where hard work is rewarded, everyone participates, and everyone enjoys a fair share of our collective prosperity”, and as building a “new economic and political system: one built by the many for the good of all”.
The report presented by the Roosevelt Institute evaluates three different variations of Basic Income, $1000 a month to all adults, $500 a month to all adults, and a $250 a month child allowance. The researchers also analyzed two different types of funding, increasing the federal debt and increasing taxes on households. The model is designed considering an eight year time period and Basic Income is progressively introduced throughout that period.
From their models of the three scenarios, the researchers conclude that, if funded by increasing the federal debt, each Basic Income policy would have a result of economic growth, the $250 child allowance would increase the GDP by 0.79%, while the $1,000 per adult would increase the GDP by 12.56%. When the Basic Income is financed by household taxes, the model forecasts no effect on the economy if the program was simply giving “ with one hand what it takes away with the other”. However, if the model is adapted using what the researchers call a “distributional model”, it forecasts a beneficial effect on economic growth. As the researchers describe it, “the distributional model incorporates the idea that an extra dollar in the hands of lower income households leads to higher spending. In other words, the households that pay more in taxes than they receive in cash assistance have a low propensity to consume, and those that receive more in assistance than they pay in taxes have a high propensity to consume.” The general idea is that lower income brackets tend to spend everything they earn, therefore consuming more, and higher income brackets tend to save part of their earnings, therefore, consuming less in relation to their potential as consumers. Therefore, if you take from the rich to give to the poor, the money will be flowing more than when it is simply accumulated by the few, and in this way, the economy will grow. The researchers (and this is the official position of the Roosevelt Institute as well) assume that our economy is “not currently operating near potential output” and this is so partly because of current gaping inequality, which is “one of the main reasons why the US economy faces the prospect of secular stagnation”.
Besides assuming that the economy could be preforming better, the model used also incorporates two microeconomic assumptions: “(1) unconditional cash transfers do not reduce household labor supply; and (2) increasing government revenue by increasing taxes levied on households does not change household behavior.” These assumptions have been promptly criticized in the media. However, the researchers themselves are aware that the assumptions are contentious, and have thus sought to establish them with evidence. They base assumption (1) on a survey of experiments done by Ionana Marinescu in a paper entitled “No Strings Attached: The Behavioral Effects of U.S. Unconditional Tax Transfer Programs” that estimates the microeconomic behavioral impact, using several experimental designs, results in labor supply remaining unchanged. Regarding assumption (2), the idea that increasing taxes does not change household behavior, the researchers assume that since the tax increase is progressive, the most affected households are the higher income brackets who tend to save and “hoard” money, so to speak, so they would save less but not change their consuming behavior in a drastic way. In order to justify this assumption, they use data from the Congressional Budget Office.
The report concludes that the researchers’ aim is not to have the final word on how to model the macroeconomic impacts of Basic Income but, instead, simply to have applied a valid model, which has done a reasonably good job of explaining macroeconomic effects so far, and used it to predict the effects of three Basic Income variations; on this model, the introduction of a Basic Income with a distributional component would mostly result in economic growth.
More Information:
Michalis Nikiforos, Marshall Steinbaum, Gennaro Zezza, “Modeling the Macroeconomic Effects of a Universal Basic Income”, The Roosevelt Institute, August 29th, 2017
Rakeen Mabud, Felicia Wong, “Starting the Conversation: The Economics of a Universal Basic Income”, The Roosevelt Institute, August 31st, 2017
“The Distribution of Household Income and Federal Taxes, 2013”, Congressional Budget Office, 2016
Ioana Marinescu, “No Strings Attached The Behavioral Effects of U.S. Unconditional Cash Transfer Programs”, The Roosevelt Institute, May 11th, 2017
by Jason Burke Murphy | Aug 16, 2017 | Opinion
I hardly ever respond to anything in writing if I am not remembering it at least a year or so later. The piece I am remembering is an episode of the podcast Freakonomics called “Is The World Ready for A Guaranteed Basic Income?” I recommend it as an introduction.
I am going to give you a quote and then I want you to keep reading.
Sam Altman runs Y Combinator, a technology venture capitalist firm that has had some great successes and is now interested in funding social science research that will include basic income. Here is the quote, which came up during his interview in this podcast episode:
Maybe 90 percent of people will go smoke pot and play video games. But if 10 percent of the people go create new products and services and new wealth, that’s still a huge net win.
We are back to the couch potato. This character appears in a lot of objections to basic income. Altman concedes that there will be couch potatoes. He just thinks that is a good price to pay to get more entrepreneurs, even only a few of them. I appealed earlier for the reader to keep going because most people in my orbit would not like this quote. (If it sounds good to you, then I guess I should still urge you to keep reading.) I will explain why some will push back and why I ultimately do not.
We are starting to see increased support for as well as new sorts of negative reactions to the idea. Not very long ago, basic income advocates were often introducing the idea to specific audiences. This meant one could get away with starting where you thought the listener would react best. If you were talking to someone on the left, you might call it a “strike fund for all”. If someone is more liberal, you would emphasize that a basic income reaches people that welfare is supposed to help. With libertarian types, you start with the efficiency and non-bureaucratic character of a basic income. I have been very impressed by recent writing that emphasizes basic income’s ability to remedy asset inequality for people of color and women.
Now, I am very pleased to see more people who have already heard about basic income from someone. Sometimes they caught the wrong person for them. As we explain basic income, we will need to separate the policy (giving everyone an unconditional cash grant) from the project (which can range from left to right).
A quote like Altman’s can swing a listener in different directions. I know this from my social media work. I imagine people running different movies in their head. Some hear “new products and services and new wealth” and visualize start-ups and think it all sounds great. Others try to imagine a world working well with 90 percent of people not doing anything anyone else wants them to do and they just can’t see that working out well. Others hear this and worry that basic income is part of a larger scheme to organize our lives around Silicon Valley capitalists. To them, Altman seems to overly glorify the tech entrepreneur. Other writers are more desperate in labeling basic income a “neo-liberal plot”, which would make you laugh if you went to one of our Congresses. We would not want to merely swap one set of capitalists for another.
I have not met Sam Altman. His other statements show that he also finds basic income interesting because it directly answers a moral mandate to make sure people are clothed, fed, and sheltered. I highly recommend the rest of the podcast. My objective here is to explain why I think we ought to look at this quote charitably. I will show in what way I think his quote is true. I also want to propose an alteration that makes it much more palatable for those I see reacting negatively.
No One is Saying Ninety Percent of Society Will Hit the Couch
Altman is not talking about a whole society in which only 10 percent work. He is saying that even if we lose some work-time to lame leisure (pot and video games), we will make it back even if only 10 percent start up new enterprises. Nor is he saying that he knows that we will get one successful start-up for every nine lives lost to the coach. He is only saying that losing nine to the couch would be an acceptable price to pay if we gain a start-up, which would offer something someone wants and would also be offering jobs. This is very plausible.
Most people with a basic income will live a lot like they do now. They will have a more stable income. They will worry less about many of their friends and family. They will have a plan if they need to train for a job or pay bills between jobs. This cuts into the number of people who would choose the couch. Work can be a place where we get recognized for our talents and for our cooperativeness. And jobs pay money. In fact, you can still count on a basic income if you take on a job. And you can count on it if you change your mind.
The problem now is that employees have very few options when workplaces go sour. Basic income creates one option (work for no one) and enables people to survive while they search for and train for other options. This will increase pressure on workplaces to improve.
I used to be suspicious of most rhetoric surrounding markets. I think that was because so much of it ended up with a conclusion like “Therefore, government should do less/nothing.” I have come to value markets more and more. Now, I want them for everyone. A basic income secures the capability to participate in markets for everyone. There are many sections of the United States that get very little government or market attention. That would be less likely with a basic income in effect. You will also see more start-ups under a UBI because failing doesn’t risk losing everything. Most entrepreneurs now come from the upper one percent of our society. Whole communities aren’t going to see much startup soon if we wait for the elite to try to make money there.
Add Caregivers and Organizers To The Mix
Someone organizing a non-profit, a political organization, or even an informal social scheme fits under Sam Altman’s phrase of “new products and services and new wealth.” He is not confining his hopes to technological startups.
Robert Putnam’s book Bowling Alone, written in 2000, lays out the loss of social networks and the harm that has caused most Americans. These can be voluntary associations, political clubs, fraternal organizations, or sports leagues. Participation has declined as work-hours per household has increased. This means that many will look for alternative ways to interact with like minded Americans, especially when it comes to sporting events.
There is a strong link between organizational affiliation and many different metrics for happiness or meaningfulness. We also see more affiliation in communities that have more political power and that generate more market activity. (There is likely a causal loop there. Lack of power and lack of market options may often precede losses in organizational depth. And a lack of organizational depth may well often precede losses in money and power.) Social-capital comes hand in hand with capital-capital.
Michael Lewis and Eri Noguchi apply Putnam’s work, and combine it with survey data, to give us strong reasons to think that we would see improvements in civic networks as well. Declines in civic participations can be shown to coincide with an increase in work hours. People who value civic participation will have an option to do so.
If you want to know how a basic income will benefit society, let’s make it clear that we are including “organizers” within our understanding of “entrepreneur”. Our culture is one that has to be reminded of this. Once we expand our understanding, we can look around and see how many people are trying to participate in institutions that organize in pursuit of truth, justice, and beauty.
Examples will help here: church committees, symphony boards, rotary clubs, sports leagues, poetry circles, craft guilds, environmental organizations, identity-based youth groups, identity-based cultural organizations, music bands, theater companies, unions, political organizations, lobbying organizations, etc. This list could go on a very long time.
At this point, I want to share a little bit of what I learned as a community organizer in Arkansas for ACORN. Organizing is difficult. There are many ways in which it is not like entrepreneurship at all. You aren’t selling anything. All organizations have trouble finding this skill set. It is also difficult to get the resources together for full-time organizing. We would often hire someone who loved the mission of the organization but had to leave for pretty small increases in money. It might also prevent the loss of organizers to the for-profit sector.
Please note: I have noticed that a large section of the US internet is trying to malign the very term “community organizer” but my argument includes organization of groups I disagree with.
The ratio of organizers to members goes beyond the one to nine ratio that Altman imagines. About six of us at Arkansas ACORN served around 5,000 households if you are only counting dues payers. The community that responded to our work was larger than that. There were meetings every month. People debated goals and tactics. Political leaders were interviewed or protested. Organizations that despised us did the same things, though often with more funding from fewer people.
Every time I hear the term “couch potato” brought up as some sort of nightmare case for basic income, I remember that I sat on thousands of couches, urging people to get active, to get involved with their community’s decisions. I know that with a basic income, we would have had more organizers and more active members. Rival organizations would have had the same benefit. We will live in a more democratic place.
I am still involved in political work, even though I am not employed to do it. I also have been published as a poet and as a photographer, though not paid. You will find a lot of people working on magazines, readings, and websites in which the true, the good, and the beautiful are debated. A lot of people can see how to raise some money doing cultural, social, or political work but they can’t get to a decent level. A basic income would generate audiences for artists, philosophers, preachers-good and bad. A thriving art world is full of disputed art. A thriving philosophical culture will have disputed philosophical projects. We will live in a more interesting place.
Norman Rockwell “Freedom of Speech”
Finally, we should look at the decision to care for a family like we would a “start-up”. The “caregiver” has started a “career” that works for many people like a vocation. For each caregiver, there is at least one other person, usually more, benefiting in a meaningful way. Economists often do not count care for children and elders unless someone is formally paid to do it. A basic income would enable people to say no to employment if someone they love needs them. We will live in a more caring place.
In fact, Robert Putnam shows us in his research, as do Michael Lewis and Eri Noguchi in theirs, that the “stay-at-home” mom was often a civic association organizer as well.
More markets, more culture, more democracy, more care. This looks to be well worth investing 3% of our GDP and letting a few people stay home.
When I read the comments and notes that come with all basic income articles, I can see that some people would worry about people not working because of basic income. Basic Income enables people not to work. Kate McFarland points out that a basic income enables people to say no to all social useful activity. But we are far away from that. Some people will live incorrectly. Many people live incorrectly now. Basic income is a good bet for increasing socially useful work.
- More entrepreneurs means more people are offered employment.
- More organizers mean more people are being invited to venues where what is true, what is good, and what is beautiful are debated and plans are made.
- More caregivers mean more people are taken care of.
Therefore, most likely, for every couch potato, we will have better reasons than ever to get off the couch.
About the author:
Jason Burke Murphy teaches philosophy and ethics at Elms College in Western Massachusetts. He serves on the board of US Basic Income Guarantee Network and recently presented at their North American Congress. He helps with social media for US Basic Income Guarantee Network. He has written before for Basic Income News. His most read piece so far is “Basic Income as Proposal, as Project, and as Idea.”
by Furui Cheng | Jul 30, 2017 | News
Shenzhen City
Shenzhen is one of the four current first-tier cities in China, and the other three are Beijing, Shanghai and Guangzhou. In February 2017, Shenzhen Innovation and Development Institute, a famous think tank founded in 2013, issued an “Outline of Shared development in Shenzhen”, which calls for a social dividend program in a package of reform measures.
Shenzhen is the first Special Economic Zone in China. In 1980, it was a poor rural area with 30,000 people. But now, more than 30 years later, it has a population of almost 20 million, with 11.9 million local permanent residents. Its total GDP is similar to Hong Kong, one of China’s Special Administration Regions. Shenzhen citizens’ per capita GDP was US $25,400 in 2015, and it is stepping into global middle developed cities. “The Sharing Shenzhen” is a new strategy after the previous “The Speed Shenzhen” and “The Quality Shenzhen”.
Although Shenzhen’s nominal per capita GDP is similar to that of South Korea, its per capita disposal income is only half of the latter’s. At the same time, the housing price in Shenzhen is double that of South Korea. Most people are living in substandard conditions, especially those 8 million non-permanent residents who have been totally excluded from the local social security system. Furthermore, no matter their income levels or social security levels, there are big gaps among even permanent residents. The Gini coefficient in Shenzhen per capita income is almost 0.5.
Shenzhen is thus facing a very big challenge of adjusting income structures to achieve social justice. Twenty Suggestions for “The Sharing Shenzhen Outline” include:
- One billion tax relief program, to help enterprises and people;
- To continue to raise the minimum wage;
- To raise working income and expand the proportion of middle-income workers;
- To improve the salaries and benefits of civil servants, so that the city managers can share the fruit of urban reform and development;
- To establish state-owned capital dividend fund, letting all the people share the results of reform and development of state-owned enterprises;
- To restart the “common prosperity” plan, to reduce the gap between permanent residents and the immigrants;
- To raise and expand the minimum guarantee income system, to cover the whole population;
- To expand the social assistance system to the medium income families including the immigrants;
- To establish a more equitable social security system covering the immigrants;
- To put the non-household residents into the housing security system, to achieve the safe living dream for everyone;
- To establish the welfare and service system for the elderly;
- To establish the universal social welfare and relief policies, so that Shenzhen’s warmth and sunshine can reach all children;
- To develop social charity system;
- To reduce the subway and bus fares;
- To promote equal employment;
- To promote fair education;
- To reform the expensive medical system;
- To relax the conditions of household registration, to make more people permanent residents;
- To control and reduce the high housing prices, to make young people full of hope and dream;
- All residents to enjoy the right of participation in social management and assume the obligations.
For the specific suggestion No. 5, the outline suggests Shenzhen should learn from Singapore, Hong Kong and Macau to give citizens a social dividend from the city’s fiscal surplus. In 2015, Shenzhen had 918.1 billion yuan [US $135.9 billion] total assets of state-owned enterprises, 461.6 billion yuan [US $68.3 billion] net assets, and 36 billion yuan [US $5 billion] profit. In addition to the corporate tax, the municipal government should get their net profit of 12.7 billion yuan [US $1.88 billion] per year as shareholders. Based on the average dividend payout ratio of Chinese listed companies, at least one third of the annual net profit could be distributed in cash as social dividend among all the residents. Given present figures, that would be 1,000 yuan [US $148] every two years for every resident. While this dividend might appear small, it is just a very conservative part of the net profit, and we can expect an increase in the future.
In the above description, Shenzhen is basically China’s miniature. The whole country faces similar problems and situations. So this plan captured the national attention after its announcement. Additionally, the director of the Shenzhen Innovation and Development Institute, Zhang Siping, is the former deputy mayor of Shenzhen city itself, and many councilors of the Institute are formerly from government sectors. They know the real crux of the city’s development, and they are making a fair plan out of their offices. This is another reason why “The Sharing Shenzhen Outline” is so striking in China.
In fact, China has not only local but also national state-owned enterprises, and the latter ones have much bigger profits. “The Sharing Shenzhen Outline” mentions only the former. All Chinese people could expect to get a national dividend plus a local one in the future.
More background information at:
Karl Widerquist, “SINGAPORE: Government gives a ‘growth dividend’ to all adult citizens”, Basic Income News, June 8th, 2011
Special thanks to Kate McFarland for reviewing this article.
by Kate McFarland | Jul 19, 2017 | News
India’s Institute for Human Development (IHD), an independent nonprofit research organization, held a roundtable on universal basic income (UBI) on July 10 in New Delhi.
More than 80 politicians, academics, researchers, and other experts participated in the event, which featured keynote addresses from Pranab Bardhan (University of California Berkeley), Vijay Joshi (University of Oxford), Arvind Subramanian (Chief Economic Advisor of the Government of India), and Renana Jhabvala (Self Employed Women’s Association), as well as panel discussions and debates.
UBI has attracted serious attention in India in recent years, due to the success of pilot studies in Madhya Pradesh in the early 2010s, as well as a widespread view that India’s current system of targeted welfare benefits and price subsidies is wasteful and inefficient. Published in January, the 2017 Economic Survey, an annual document prepared by the Ministry of Finance, devoted an entire devoted an entire chapter to UBI, reviewing arguments for the idea, challenges of implementation, and strategies for introducing possible stepping stones to UBI in India. Finance Minister Arun Jaitley has recently stated that UBI is not feasible in the country due to “political limitations.”
The IHD roundtable event began with an inaugural address by Bibek Debroy of National Institution for Transforming India (NITI Aayog), a think tank of the Government of India.
This was followed by four technical sessions organized around the work of Bardhan, Joshi, Subramanian, and Jhabvala, respectively.
Pranab Bardhan, CC BY-NC 2.0 UNU-WIDER
Bardhan maintains that a UBI of about a thousand rupees (about 15.5 USD or 13.5 EUR) per month can be afforded by increases taxes on the rich and ending certain government subsidies that primarily benefit the better-off. He cautions, however, that the UBI should not replace all current welfare programs nor divert funding from public goods and services.
(For an overview of Bardhan’s position, see his blog post “How India can do UBI: Universal Basic Income is a practical solution to poverty and inequality,” published May 3 in Times of India.)
Three panelists–Abhijit Banerjee (Massachusetts Institute of Technology), Abhijit Sen (formerly of India’s Planning Commission), and Ajit Ghose (Visiting Professor at IHD)–discussed Bardhan’s proposal following his presentation.
Vijay Joshi, CC BY 2.0 Chatham House
In the second technical session, Joshi laid out the model of UBI developed in his recent book, India’s Long Road: The Search for Prosperity, which he calls a universal basic income supplement (UBIS). Joshi proposes a UBIS of 3500 rupees per person year (at 2014-15 prices) to replace most price subsidies and targeted welfare programs (“retain[ing] only those of proven worth”). According to his calculation, the UBIS would cost of 3.5 percent of India’s GDP.
(See also Joshi’s blog post for The Economic Times, “Universal Basic Income is worth fighting for, even against the long odds in its implementation.”)
Panelists who discussed Joshi’s ideas included Amarjeet Sinha (Secretary of the Ministry of Rural Development of the Government of India), Dilip Mookherjee (University of Boston), and Swaminathan Aiyer (author and columnist).
Arvind Subramanian CC BY-SA 2.0 PopTech
The third session focused on the proposals in the Economic Survey, written by Subramanian. (Subramanian himself was unable to participate in the event; however, an aide delivered a presentation on this behalf.) Whereas both Bardhan and Joshi argue in favor of universality, the Economic Survey’s proposal is written under the assumption that, in practice, no program can achieve full universality; thus, it ultimately focuses on a “de facto UBI” with a “quasi-universality rate” of 75 percent. In the document, Subramanian considers several methods by which to phase in a (de facto) UBI, such as introducing the program first only for women or members of other vulnerable groups, or only in urban areas, or allowing beneficiaries of current welfare programs to opt instead for unconditional cash transfers.
Panelists on the Economic Survey proposal included Ashwani Saith (Institute of Social Studies, The Hague), Rohini Somnathan (Delhi School of Economics), and Shekhar Shah (National Council of Applied Economic Research, New Delhi).
Renana Jhabvala, CC BY-NC-ND 2.0 ILO in Asia and the Pacific
Finally, Jhabvala presented “perspectives from the field,” reviewing the results of the UBI pilots conducted by SEWA in rural villages in the state of Madhya Pradesh. Contrary to worries that a UBI would lead to higher spending on temptation goods, the pilots revealed no increase in alcohol consumption. Furthermore, the short-term UBI was associated many positive effects, including better nutrition, a decrease in serious health problems, higher rates of school attendance, lower debt, and greater job opportunities, especially for women. A follow-up study conducted earlier in this revealed several lasting effects in the villages in the study, as compared to control villages; these included higher incomes, especially for women, and lower rates of alcohol consumption. Other effects, however, were seen to have ended quickly after the termination of the pilot program, such as increase enrollment of children in private schools.
Panelists on the SEWA pilot study were Jeemol Unni (Ahmedabad University, Institute for Rural Management Anand), S.M. Vijayanand (Former Secretary, Panchayati Raj, Government of India and Former Chief Secretary, Government of Kerala), and P.K. Joshi (International Food Policy Research Institute, New Delhi).
A closing session, chaired by MP Jay Panda, was held after the four technical sessions.
For more information, see the IHD website, which includes a press release summarizing the event, as well as a booklet containing a full schedule, speaker and panelist bios, and background reading for all keynote lectures.
Cover Photo: CC BY-NC-ND 2.0 sandeepachetan.com travel photography
by Dawn Howard | Jul 19, 2017 | Opinion
Topher Brennan is a progressive candidate from the state of California, currently running for US Senate. A self-professed “policy geek”, Brennan holds an undergraduate degree from the University of Wisconsin and a master’s degree in Philosophy from the University of Notre Dame.
Brennan recently put forth a plan for implementing a basic income with his timely essay “The case for a basic income guarantee”. In it, he provides various examples of failures within the current welfare system – specifically the SNAP (food stamps) program – and discusses replacing SNAP, as well as the group of programs known as OASDI, with a basic income.
You can read the full article here.
Dawn Howard: Please give our readers a little background into when and how you first became aware of basic income.
Topher Brennan: I’ve been aware of the concept of basic income for a long time, but I think I may have first heard about it in Robert Heinlein’s novel For Us, The Living, which I would have read back in in college, maybe even high school. I don’t remember what my initial reaction was. I may have thought “sure, that might make sense in the distant future, when everything is automated”—but by high school I was already a big fan of individual autonomy, so it wasn’t long before I figured out you could do something like that right now.
DH: Have you been following any of the current basic income pilot studies happening across the globe? If so, how do the design models and results of these pilots influence your own concept of its potential implementation?
TB: Most of the really exciting research I’m aware of is still ongoing. That said, I’m a huge fan of the charity GiveDirectly. I believe their basic income study hasn’t launched yet, but their research on one-time, no-strings-attached cash transfers provides strong evidence that when you give poor people money it really does lead to big improvements in their lives. It doesn’t all just get wasted on booze or anything like that.
I’m not sure I can claim this influenced my support for basic income—I was pro-basic income long before I knew about GiveDirectly, and the results of their research seem totally unsurprising to me. The reason the free market mostly works well is that (again, for the most part) people are pretty good at looking after their own interests. When politicians talk about creating jobs, no one retorts, “that won’t help, because the people who get the jobs will spend all the money on booze”. But when you talk about anti-poverty programs, suddenly everyone worries about that.
I should also say that when I was writing the article on basic income that I recently publish on Medium, a lot of the specifics were driven by looking at the current state of the social safety net in the United States specifically, and how it sometimes goes wrong. Basic income is a great idea no matter where you are, but I expect the implementation details will be somewhat country-specific.
DH: Given that poverty is typically considered a bi-partisan issue, how feasible would it be to implement a small-scale basic income pilot in California, given the state’s current budget concerns and overall political climate?
TB: You might be able to do it, but it would be tricky. Thanks to proposition 13 (an anti-tax ballot initiative passed when California was a much more conservative state), you’d probably need a ballot initiative to fund it. Also, because most current anti-poverty spending comes from the federal government, and the federal budget as a whole is just bigger (even in terms of percentage of GDP), I think you could shoot for a much bigger basic income right off the bat, working at the federal level.
DH: In your essay ”The case for a basic income guarantee”, you write:
“Being poor means politicians will try to micromanage your life. Politicians like to say they support helping the poor, but only the deserving, and only for things they really need. Whatever you think of that in theory, in practice, the government is bad at telling who’s deserving. It’s also bad at telling what people really need. All that happens is that we make the lives of people we’re trying to help worse, with nothing to show for it.”
Given that you recognize the desire for self-determination and autonomy among individuals living in poverty, do you feel that the government’s role is simply providing a monthly or yearly payment, or do you feel that some recipients would benefit from further education and/or government assistance in order to budget their money wisely?
TB: With education, if we’re talking about adults, people have the option of spending their basic income on education for themselves. A free $8,000 per year, for example, would make college much more affordable. The question of to what extent the government should be subsidizing college education, I think, comes down to somewhat technical issues of how much of the benefit of a college education is captured by college graduates, versus being a positive externality. I don’t actually know the answer to that question.
With K-12 education, there are some additional complications. In the United States, there are states where homeschooling is totally unregulated, and the result is some parents end up educationally neglecting their children. That’s not a win for personal autonomy—those kids didn’t make an informed choice to go without a decent education in their early years; their parents decided that for them. And basic reading and math are important skills no matter what you do with your life, so I’m pretty comfortable with the government insisting children learn them.
Which is not to say our current K-12 is perfect by any means. But when I think about things I’d hope to see fixed in the near future, I think about evening out the disparities in school funding so we don’t have supposedly public schools that are de facto private because you can only go to them if your parents can afford the absurd housing prices in the district. What the right thing to do would be, in an ideal world, if we were designing the system from scratch—I don’t know.
As for helping people with budgeting, I think most people who find themselves financially strained become pretty good at budgeting in a hurry because they have to be. You can add various caveats to this—supported decision making can be very helpful for people with intellectual disabilities, for example—but the idea that what poor people really need is help budgeting, at least the way it’s often meant, is a myth.
DH: Even though libertarians, greens and independents do not make up the lion’s share of registered voters in California, libertarians in particular might find certain aspects of your campaign platform appealing and consider voting for you. However, your stance on basic income might turn them off because of its distribution model – specifically that it puts more power in the hands of the federal government. How would you respond to this type of concern from voters who do not want the government running large-scale social welfare programs?
TB: I’d dispute the premise that it puts more power in the hands of the federal government. If it looks that way, it’s because the federal policies I’d like to replace (in part or in whole) are often designed to look smaller than they actually are. I really try to avoid that, because I think it leads to bad policy, even if it would be politically convenient.
For example, the federal government spends over a trillion dollars a year on so-called “tax expenditures”, where the tax code is written a certain way not because it’s the most sensible way to raise money for things the government wants to do, but in the service of some social policy or other.
Tax expenditures are popular because they let politicians say, “it’s not a spending increase, it’s a tax cut!” But they can have perverse effects relative to more straightforward approaches to the same issues. I’m not always sure these consequences are unintended. Because tax expenditures are confusing, they also make it easier to sell one policy to voters and another policy to donors.
Another example is means testing of government programs. It sounds like common sense—government programs should help only those who really need it. And it’s politically convenient, since it can make a program look much cheaper on paper. But means testing is functionally equivalent to combining a much larger program with a large income tax—the tax is just hidden. And because it’s hidden, it’s more likely to be designed in a stupid way where some people wind up with a 95% effective marginal tax rate, and have little reason to, say, try to get a promotion or take on more hours.
So I try, as much as possible, to avoid these policy mistakes—even if it means more work explaining a proposal to people.
DH: Many activists within the basic income community posit that our current economic system (capitalism) is inefficient and unsustainable, and that eventually we must transition out of it. Do you see basic income as a type of incremental step toward this transition – a kind of temporary “band aid”?
TB: That’s a big question! It depends both on what you mean by “capitalism” and what happens with future technological development. The former we can argue about endlessly, and the latter I don’t think anybody knows for certain. I will say this, though—I think most people underestimate how many features of our current economic system are not the natural order of things, or even “what happens under capitalism unless someone reigns the corporations in”, but are the feature of specific government policies, which are often not well-thought-out, or which are designed to benefit the powerful rather than the average person.
Take prescription drugs, for example. I recently heard someone put this very succinctly: if prescription drugs were a free market, you’d be able to order them from Canada. High prescription drug prices are sometimes justified on the grounds that they’re necessary to fund drug research, but I think it’s pretty obvious we could find better ways to fund drug R&D than what we currently have.
And there are lots of things that are like that. So I think we could have a better, fairer economic system that would look quite a bit different than what we have right now, whether you’d end up classifying it as a variety of capitalism or not.
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