by Karl Widerquist | Aug 1, 2012 | Research
Trish Hennessy recently published a short article on the Canadian Centre for Policy Alternatives blog that included a variety of expert opinions on how to reduce income inequality. A wide range of solutions were presented within the 16 quotes that were used in the blog, including: improvements to the labor market, employment protections, income supports, public services, and changes to the tax system. One of the experts Hennessey consulted was Rob Rainer, the Executive Director of Canada Without Poverty, who suggested that income security could best be reduced by a new basic income scheme, guaranteeing a sufficient and stable floor of income for all Canadians.
The article is online at: https://www.behindthenumbers.ca/2012/06/06/how-to-fix-income-inequality/
by Guest Contributor | Jul 2, 2012 | Opinion
At the North American Basic Income Guarantee Congress in Toronto, which I attended in May 2012, Charles Karelis, author of The Persistence of Poverty, demonstrated what is wrong with much thinking about poverty, using a simple analogy. Suppose you are stung by a bee, and you are offered enough salve to relieve the pain of that sting. Most people would consider that daub of salve to be worth quite a bit. Now suppose you have 7 other bee stings. Will you still value a daub of salve sufficient to relieve one sting as much as you did when you had only one sting? If you think about it, you will value that one daub less, because it will do nothing to relieve the 7 other stings that remain. Now suppose with these 8 stings that you are given salve for 7 stings. Now you have increased motivation to relieve the one sting that remains, because that additional daub will free you from pain. This simple example is an important exception to a widely accepted principle of economics, the principle of declining marginal utility (PDMU). According to the PDMU, the more you have of something, the less each additional unit is worth at the margin. For example, after you have had one piece of cake, the second is worth less to you than the first, and after two, a third is worth even less. PDMU applies well to what Karelis calls “pleasers,” like the dessert example. But it does not apply to what he calls “relievers,” like the sting salve. In the case of relievers, the more you have of something, the more an additional unit is worth at the margin. The utility of that last daub of salve is worth more to you, not less, than the first daub, because the last daub is the one that gets you out of misery.
Now it turns out that many of the goods that matter to poor people are relievers, not pleasers, or they are hybrids, functioning like relievers when one has less than enough, and like pleasers once one crosses a threshold of sufficiency. Transportation is an example of a hybrid. If you have a 20-mile journey to work, you are not apt to pay bus fare for the first mile of the journey, leaving 19 miles to go on foot. But you might well be willing to pay bus fare to relieve you of the last mile after having walked 19. And transportation beyond what you need declines in value.
Poverty means troubles, and like multiple bee stings, these troubles drown each other out. Relief from one problem will not necessarily be pursued by someone if she is left in other troubles. If we keep this in mind, Karelis argued, we can explain much of the behavior of poor people, not as due to some character defect, but rather as what any reasonable person would do in such circumstances. Consider low work effort. If money from work were a pleaser then the first dollar should be the most valuable, and a rational person should be eager for work, no matter how poorly paid. But if money from work is only a reliever, as it is for someone in poverty, then that first dollar won’t be worth much, like the first daub of salve, since it leaves one in a sea of troubles.
Or consider a failure to save. Saving makes sense as a means of deferring consumption, and as a way of insuring for unexpected shocks to one’s income from layoffs, illness, emergency home repairs, etc. But when one’s current consumption is taken up with basic needs, the value of deferred consumption is much less. And it may be more rational to address the ups and downs of income shocks than to try to smooth out these shocks through saving. Going back to the bee sting analogy, suppose you are getting two stings a day, but have only enough salve for, on average, one sting per day? Are you going to relieve only one sting every day, or relieve two stings, every other day? The latter makes more sense, but it is the opposite of the smoothing out strategy that saving makes possible. Yet it is more reasonable, given that one is dealing with relievers.
What are the policy implications of this analysis? Karelis argued that a guaranteed income would be counterproductive for people who are not poor, as it would undermine work motivation. However, a negative income tax, guaranteeing income up to the poverty line, would actually increase the incentives for a poor person to get out of poverty. It would supply the reliever goods up the point where the additional unit of income is worth more, and so in pursuing it one is stepping out of poverty, not remaining stuck in it. The poor are just like everyone else, except that they have less money. Once policy makers begin to understand this, we may begin to shift from our current counterproductive policies of punishing the poor and blaming them for their condition, to an effective strategy that will get people out of poverty.
For further reading, see Charles Karelis, The Persistence of Poverty (Yale University Press, 2007).
by Karl Widerquist | Jun 25, 2012 | Opinion, The Indepentarian
The Eleventh North American Basic Income Guarantee (NA-BIG) Congress took place at the University of Toronto on May 3-5, 2012. I had the privilege of attending this conference. It provided an unusual opportunity for me to go to a NA-BIG Congress purely as a participant, because I had almost nothing to do with the organization of it this year.
The theme of the Congress was “Putting Equality Back on The Agenda: Basic Income and Other Approaches to Economic Security for All.” It began—unusually for a conference primarily dedicated to examining basic income—with two skeptics explaining what was wrong with the basic income as a solution to current problems in the United States and Canada. I applaud these participants for speaking their mind in an auditorium full of basic income supporters. It was kind of strange to begin with the skeptics—rebutting an idea that hadn’t yet been presented at the conference—but it worked very well to keep the basic income supporters on their toes throughout the conference.
The organizers invited two speakers to focus on the problems of poverty and inequality rather than specifically on basic income as a proposed solution: Charles Karelis (Research Professor of Philosophy at The George Washington University and author of The Persistence of Poverty: Why the Economics of the Well-Off Can’t Help the Poor) and Richard Wilkinson (Professor Emeritus of Social Epidemiology at the University of Nottingham Medical School and co-author of The Spirit Level: Why More Equal Societies Almost Always Do Better). Even though these speakers’ remarks were not directly about basic income, they were valuable to the conference, because they show the need to do something about poverty and inequality in the world today. It’s the work of a conference like this to see if basic income can help solve the problems researchers like these have identified.
One featured speaker, Erik Olin Wright (of the Department of Sociology, University of Wisconsin – Madison, author of Envisioning Real Utopias, and American Society: How it Actually Works), brought the congress back to focus on basic income, but he did not support the common version of the basic income proposal—a basically unregulated economy with basic income as its one central progressive reform. He argued that basic income would only succeed if it were part of a major reform of the economic system.
One of the most pertinent presentations was given by Evelyn Forget (Professor, University of Manitoba Faculty of Medicine, author of a major forthcoming study on Mincome: the Manitoba minimum income experiment). She has been working for several years to recover and analyze data from the Canadian Negative Income Tax experiment, known as Mincome. The experiment was conducted by the Canadian Federal government in the late 1970s, but it was cancelled before the data was analyzed. Only now, thanks mostly to Evelyn Forget, are the findings of the experiment becoming fully available. She finds that the experiment had many benefits for recipients including, for example, improved school attainment among children and improved health outcomes for all family members.
Senator Art Eggleton, former mayor of Toronto, concluded the conference with a practical discussion of how to put BIG on the political agenda in North America.
The parallel sessions provided a wide range of discussion about BIG. These sessions were especially valuable for me because I was able to attend two sessions and a dinner dedicated to providing feedback to me on chapters of the book that I am currently polishing for publication. The book makes a freedom-based argument for an unconditional income from the perspective that the imposition of rules, including the rules of property, make the poor unfree in very important ways. Basic income is both compensation for the imposition of these rules and a necessary institution (in modern industrial society) to maintain each individual’s status as a free person with the power to accept or reject active cooperation with other willing individuals. The sessions I participated in helped me formulate this argument and to present the book as a work of political philosophy.
For me, the Congress was also an opportunity to reconnect with friends, colleagues, and acquaintances. I have now been to six BIEN Congresses and all eleven NA-BIG Congresses. I believe there are only three of us who have been to all eleven Congresses (the other two being Jeff Smith and Al Sheahen). Every Congress is a little different. Some themes recur every time, but I’m always confronted with new ideas.
One welcome addition to this Congress was the presence of a significant number of people who are on disability or other forms of public assistance. This group brought the discussion back to practical issues every time, providing a skeptical view of nearly all the ideas presented. I hope we can get someone from this group to be a featured speaker at an upcoming NA-BIG or BIEN Congress.
The North American Basic Income Guarantee Congress is a joint project of the USBIG Network and the Canadian Basic Income Guarantee. It takes place in Canada and the United States on alternating years. Next year’s Congress will be in New York City in February (see announcement above).
For more information on this past conference go to:
https://biencanada.ca/
Papers from the Congress will be online as part of the USBIG Discussion Paper Series at:
https://www.usbig.net/papers.php
by Karl Widerquist | Jun 23, 2012 | News
The Twelfth Annual North American Basic Income Guarantee (NABIG) Congress will be held on May 8-10, 2013 in conjunction with the Eastern Economic Association’s Annual Meeting at the Sheraton New York Hotel and Towers, New York City. Almaz Zelleke, of the U.S. Basic Income Guarantee Network, will organize the Congress.
The NABIG Congress is a joint project of Basic Income Canada Network / BIEN Canada and the U.S. Basic Income Guarantee (USBIG) Network. The conference takes place annually, alternating between the two countries. The congress brings together academics, students, activists, policy analysts, government officials, low-income people, and others interested in exploring the Basic Income Guarantee (BIG), a government-ensured guarantee that all citizens unconditionally receive an income sufficient to meet their basic needs.
The call for proposals will be released soon. The deadline for proposals will be sometime before the end of this year.
Please save the dates of the Congress: May 8-10, 2013
For more information about the Congress, see the USBIG website: www.usbig.net or email: Almaz Zelleke <azelleke@gmail.com>.
