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 Jurgen De Wispelaere | Feb 16, 2018 | News
ESPAnet is the leading comparative social policy conference in Europe. Jurgen De Wispelaere (Bath University) and Heikki Hiilamo (Helsinki University) are coordinating a stream on “The Political Economy of Basic Income: Opportunities, Constraints, Trajectories” for its upcoming conference on transformations of European welfare systems in Vilnius (Lithuania), on the 30th of August – 1st September 2018. The submission of papers ends on the 19th of March 2018.
The idea of granting each (adult) citizen an unconditional basic income, independent of means test or work requirement, has made major strides in recent policy debates across Europe. Several countries in Europe and North-America are experimenting with or planning basic income-inspired trials, while in other jurisdictions basic income is considered at the highest level of policy-making.
Mainstream policy actors embracing a proposal that until very recent was considered to be part of a radically utopian fringe raises a number of policy questions, which we expect the proposed abstracts to cover. What explains the current interest in the basic income proposal? Are we experiencing a genuine window of opportunity firmly embedding basic income into the policy process in mature welfare states, or are we instead witnessing a fad that is likely to fade when feasibility constraints are taken into account? What are the key policy determinants for understanding the feasibility and stability of basic income against the background of established institutions and policy configurations, as well as recent developments in European welfare states? Which social, economic and political factors affect the building of robust basic income constituencies and a stable political coalition across stakeholder groups and political actors? What challenges need to be overcome and which trajectories are most suited to pilot and/or institute a basic income? How must basic income models be adapted to accommodate political and institutional constraints? Does systematic variation in how different welfare regimes respond to political challenges explain the variation in basic income models under consideration?
This stream aims to advance the policy debate around basic income by critically examining these and related questions in the context of European welfare states. Our aim is to put the policy research into basic income on a firm theoretical and empirical footing, by selecting contributions that employ insights from recent welfare state and political economy research to examine aspects of basic income design and implementation. We are particularly interested in contributions that investigate novel aspects of and/or adopt novel methodologies in examining the political economy of basic income. We will also give priority to contributions that embrace a distinctively comparative focus to draw out the diversity of opportunities, constraints and trajectories in the basic income debate across European welfare states.
by BIKN Korea | Feb 15, 2018 | Opinion
South Korea’s government included an expenditure to design potential models for a basic income experiment into the budget for 2018. It shows that government and politicians in South Korea have started to consider basic income as a significant and unavoidable policy.
Against this backdrop, BIKN held a conference under the title of “Why we need a basic income experiment: The necessity of BI and significance of a BI experiment” on Jan. 23, 2017, which was co-sponsored by the Democratization of Economy Forum of the National Assembly.
Four speakers came to propose potential basic income models for Korea and to make a critical evaluation of the experiments that have already been carried out or will soon begin in other countries or regions.
Professor Seo (Gunsan National University) said the existing social security system is based on an employment-contract relation, revealing the limitations of highlighting the qualitative change of work into “flexible” employment. We need to form new strategies to face the current situation and we constructed three possible options.
The first strategy is an expansion strategy that seeks to expand the legal nature of employees considering their actual conditions. The second is to shift the basis of social insurances from employment-based social insurances to income-based ones. Finally, we could consider the basic income strategy. Professor Seo said that the first strategy, a kind of legal approach, has two drawbacks which does not keep up with the actual changes in the economy and is subject to many blind spots. Although, such a strategy could be helpful in the short-term. The second strategy is limited because it is still based on labor-related income. So she maintained that the basic income strategy is the most effective in the “workless” future.
Professor Baek (Catholic University), stood upon the same understanding of the current situation as Professor Seo. Seo brought attention to the transition to a welfare state centered on basic income in his presentation, “Precarious Work and Basic Income for Young People.” In the first he suggested the ideal method of transition is comprised of eight stages: 1) rational adjustment of the existing social security system; 2) implementation of new categories of social assistance programs such as unemployment allowance; 3) strengthening social allowances for children, the elderly, and people with disabilities; 4) introduction of a social benefit for young people; 5) implementation of participation income; 6) expansion of the coverage of age groups in age-related categorical allowances; 7) introduction of a low-level basic income which integrates a few social allowances; 8) implementing a full basic income. For this, he maintained that the most useful and effective method is to introduce a basic income for young people first, after he highlighted the insecurity of young people in Korea (unstable employment, low wages and exclusion from social insurances).
Dr. Park (Chungnam Institute) proposed a Farmer’s Basic Income or Rural Residents’ BI in “Requirement of Farmer’s (Rural Residents) BI and Introduction Plan.” His starting point is that the income of farmer’s household has steadily decreased, and the existing subsidy has a serious drawback. In 2016, the average earning of a farmer’s household is 63.5 percent of an urban worker’s one, which has undermined the foundation of agriculture. And the subsidy is paid in proportion to the arable acreage, which causes disadvantages to petty farmers. In fact, the total size of the subsidy is too small. Dr. Park proposed the Farmer’s BI or Rural Residents’ BI to enhance the public value of agriculture and to secure the income of a farmer’s household.
Professor You (Australian National University) proposed the principles and direction that should be the basis of a BI experiment in Korea, while examining the basic income experiments or similar ones carried out across the world. He found that the experiments could be a foundation for discussing implementation of BI, even though they have limitations. He proposed that we need to make comprehensive and long-term design for a BI experiment to whatever extent possible. To produce such a design, two features would be required: close cooperation with government and a wide range of expert participation.
The South Korea government will post the program to design BI experiments to which BIKN will apply with other academics and experts. It will be an opportunity to spread the legitimation and necessity of BI widely, even if BI is not implemented in a short timeframe in Korea.
Hyosang Ahn, Executive Director of BIKN
Edited by: Tyler Prochazka
by Andre Coelho | Feb 10, 2018 | News
Ricardo Anaya. Credit to: OMB Online.
Ricardo Anaya, potential candidate for Mexico’s next presidential elections in July 2018, presents an unconditional basic income as his main proposal in matters of social policy. An overview of this proposal, as spoken by Anaya, can be watched in this short video. Here, in general terms, he presents the basic income proposal, describing what are the ten main advantages of its implementation, in his view. Financing it would essentially come from reorganizing public spending and deeply changing social policy programs within the government.
This initiative comes from a joint ticket between the centre-right Partido Acción Nacional (National Action Party – PAN) and centre-left Partido de la Revolución Democratica (Party of the Democratic Revolution – PRD), plus leftist Movimiento Ciudadano (Citizens Movement – MC), which calls itself Por Mexico al Frente (Put Mexico Ahead, former Frente Ciudadano (Citizen’s Front)). This coalition aims at “winning the Presidency, building a stable majority government and establish the first coalition government in Mexico’s history”, as ex PAN national leader Anaya Cortés has declared.
The basic income proposal under consideration within the bounds of this coalition aims at a 10 000 Pesos (US$537) per year for every Mexican citizen, including children. Jorge Alvarez, a Mexican congressman involved in the plan has said in an interview that financing this could be done by consolidating funds from federal, state and municipal welfare programs. He also added that this basic income for children could be made conditional on school enrolment. That latter comment, of course, deviates from what would be an unconditional basic income, but such condition has been introduced in other proto-basic income-like programs, such as the Bolsa Familia in Brazil. It could then be referred to as an alternative to basic income for children.
Independently, senator Luís Sánchez Jiménez from PRD has requested the Mexican Senate to look into the cost of various minimum income schemes, including universal ones, through its research department. This report will soon be available, authored by John Scott, a professor/researcher in the Department of Economics at the Centro de Investigación y Docencia Económic (CIDE) in Mexico.
More information at:
Editorial Processo, “PAN, PRD y MC desechan Frente Ciudadano; su alianza se llamará “Por México al Frente” (PAN, PRD and MC discard Frente Ciudadano: their aliance will be called “Por México al Frente”)”, Processo, 8th December 2017
Anthony Esposito, “Checks for free: a Mexican plan to combat poverty”, Reuters, December 6th 2017
