Thomas Piketty. Picture credit to: Books Live (Sunday Times)
Details are being fed into Rahul Gandhi’s promise of a minimum income guarantee to poor Indians, an announcement made earlier this month. Thomas Piketty, an authority in economics, and particularly in inequality analysis, is assisting Ghandi’s Congress party in designing the policy onto the Indian context.
Although Piketty has a particular vision on basic income, he has supported a universal, unconditional basic income. At some point the particulars of his proposal may have generated confusion, but it seems his contribution to what can be a real shot at implementing (a kind of) basic income in India prove his resolve on this matter. “It is high time to move from the politics of caste conflict to the politics of income and wealth distribution”, Piketty has stated. MIT professor Abhijit Baerjee is also helping to materialize this idea on the Congress manifesto for the upcoming elections. Economy Nobel prize winner Angus Deaton was also contacted by party officials, but hasn’t apparently been involved in the scheme’s design.
The Congress’s proposal for its “minimum income guarantee” was told, by party officials, to be “anything above 10000 Rupees per month” per household. For a typical family, that would amount to 66% of the family’s net living wage, which contrasts with the Bharatiya Janata Party (BJP) most recent promise for implementation of a basic income-type of policy (6000 Rupees/year, per small farmer).
More information at:
André Coelho, “India: Basic income is being promised to all poor people in India”, Basic Income News, February 1st 2019
Expenditure and Living Wage calculation in India
Scroll staff, “Minimum income guarantee: Economist Thomas Piketty confirms he is helping Congress with the scheme”, Scroll.in, February 7th 2019
Thomas Piketty, “Is our basic income really universal”, Le blog de Thomas Piketty, February 13th 2017
Genvieve Shanahan, “FRANCE: Piketty’s comments on basic income cause confusion”, Basic Income News, February 3rd 2017
D.K. Singh, “Thomas Piketty & Angus Deaton help frame Rahul Gandhi’s minimum income promise”, The Print, January 31st 2019
André Coelho, “India: The Indian government also promises basic income to farmers”, Basic Income News, February 12th 2019
(Image Credit: Le Monde)
Thomas Piketty, Professor in the Paris School of Economics and author of Capital in the 21st Century, in his blog (in Le Monde) reports “there is a degree of consensus in France” on the provision of a minimum income. French citizens are for it.
For the minimum income, Piketty says disagreements exist around the amount. The consensus for the provision of a basic income is seen in “numerous other European countries,” Picketty claims. Piketty notes the problem with discussions about basic income is the “real issues” are not explored and can represent “social justice on the cheap.”
“The question of justice is not simply a matter of 530 Euros or 800 Euros a month,” Picketty said, “If we wish to live in a fair and just society we have to formulate more ambitious objectives.”
Piketty said, “The debate on basic income has at least one virtue, namely that of reminding us that there is a degree of consensus in France on the fact that everyone should have a minimum income.”
In a previous interview, Piketty supported some arguments for a basic income (financing access to basic goods) and remained skeptical about other arguments (substitute for basic goods) for a basic income.
Read the full article here:
Thomas Piketty, “Basic income or fair wage?“, Le Monde, December 13th, 2016
Renowned French economist Thomas Piketty, best known for his 2013 book Capital in the Twenty-First Century, has been making headlines for his positive comments regarding basic income in a number of blog posts. However, the approach he proposes is not basic income as it is commonly understood.
In a blog post published on 13 December, Basic income or fair wage?, Piketty states that while he’s pleased to see such consensus across the political spectrum on the idea of a minimum income within France, discussions of a basic income and its specific level are not radical enough – that such conversation “leaves the real issues unexplored and in reality expresses a concept of social justice on the cheap.” He points instead towards progressive taxation, fairer approaches to education and fair pay and control within corporations as topics deserving focus.
Returning to the question of basic income, Piketty raises what is essentially an important administrative concern. He notes that, at present, employees earning the minimum wage rate in France have their taxes and social contributions deducted from their wages at source, putting their net wage below the threshold for social assistance. However, the worker must herself apply and wait several months to receive the social assistance necessary to bring her income back up to the minimum level. Piketty seems to be concerned that such inefficiencies and poverty traps would proliferate under a basic income scheme.
Then, on 25 January, a collection of prominent researchers, including Piketty and famous sociologist Dominique Méda, published in ‘Le Monde’ a call in support of Benoît Hamon’s basic income proposal – Pour un revenu universel crédible et audacieux [For a credible and audacious universal income]. Some news organisations quickly followed with headlines claiming Piketty had endorsed basic income, yet the scheme it describes is not what we would ordinarily understand as basic income (and certainly strays from BIEN’s definition on a number of points).
To begin, the researchers defend an interpretation of Hamon’s basic income scheme that may not be entirely accurate, stating:
“Benoît Hamon never said that he would pay 500 euro a month to 50 million adults. On the contrary, he has explicitly noted the fact that the new system could be subject to resource conditions and concern only wages of less than 2000 euro, with amounts that would clearly not be the same for all.”
However, as we have covered here and here, Hamon does indeed hope to ultimately offer a full basic income, and while his steps towards such full implementation have been modified somewhat over the course of his campaign, the first step he proposes is for a basic income to be paid to those between the ages of 18 and 25, unconditional on resources or low wages.
A two-speed social security scheme?
Piketty’s administrative concern again arises here, with the authors claiming that “it would hardly make sense to pay 600 euro a month to those earning 2000 or 5000 euro a month, to then immediately take back the same amount by increasing their taxes.” This leads the piece to end with an argument for “basic income” to be provided essentially as tax credits on the payslips of the stably employed.
In response to requests for clarification following this post, Piketty published another blog post on 30 January – Notre revenu universel est-il vraiment universel? [Is our universal income really universal?]. In this article, Piketty clarifies his recommendation, suggesting that it would be most efficient to establish different methods of payment of the basic income dependent on different employment circumstances:
“We believe that it is high time to move away from the comfortable abstractions that often characterise this debate, and finally to say precisely how it is possible to proceed. In this case, the solution we propose is to pay the universal income in a mixed form. For all those without jobs, or who only have a very part-time job, or indeed whose job is divided between multiple small employers or contractors, then there is no other solution than to pay the universal income in the form of an allocation managed by public agencies.”
Piketty claims, however, that direct payment of an income top-up on stable employees’ payslips is to be preferred, where feasible, because it links the idea of basic income with that of a fair wage and because, in practical terms, he does not believe the basic income payment would be as simple and automatic as the top-up.
Nicole Teke, public relations coordinator for the French Movement for Basic Income (MFRB), has the following to say:
“Even though he clearly shares the spirit of UBI in terms of establishing an income floor for everyone, his proposal would create further polarisation of the labour market by having a two-speed system for stable workers vs. unstable workers and the unemployed. This contradicts the principle of universality of basic income.”
MFRB have laid out a number of responses to Piketty’s comments here. This includes a useful side-by-side comparison of one of MFRB’s basic income proposal and Piketty’s suggested scheme, and an analysis of the potential perverse effects of the latter.
Looking at basic income from a narrow perspective
A common thread through these three articles seems to be Piketty’s belief that basic income, when implemented, would amount to a mere increase of the amount of money eligible citizens could apply for, with no change to its bureaucratic system of administration. He then repeatedly contrasts a system whereby the full “basic income” is listed on stable employees’ payslips, along with the relevant taxes that partially or fully outweigh this amount, with his preferred system of simply listing the balance, if any, owed to the worker.
This preconception of how basic income would be implemented seems to be partially motivated by his own preference regarding the message a basic income would communicate: that work is valuable, and basic income is a way of offering a just salary and equitable remuneration for work. He also espouses a belief that working life won’t change in response to automation and “Uberisation” as much as others suggest, so we should prefer top-up payments on payslips to a separate, standardised basic income system for all, paid directly by the government.
In this way, while Piketty begins by chastising basic income proponents for lacking radical vision, he ultimately endorses just a minor part of the basic income proposal – that of automatic payment. And while, in the joint letter, we are entreated to offer a concrete basic income proposal, the system put forth caters only to a subsection of the population, with hand-waving regarding how this would connect to basic income for the rest.
As Nicole Teke of MFRB concludes:
“By focusing on the financial distribution effect of UBI, Piketty misses the bigger point of UBI: to emancipate citizens. Despite his good intentions in fostering the debate, Piketty has created somewhat more confusion on the definition of universal basic income, which MFRB has tried to establish as a standard in the debate in France.”
Thomas Piketty, “Basic income or fair wage?”, Le Monde, 13 December, 2016.
Thomas Piketty et al., “Pour un revenu universel crédible et audacieux” [For a credible and audacious universal income], Le Monde, 25 January, 2017.
Thomas Piketty, “Notre revenu universel est-il vraiment universel?” [Is our universal income really universal?], Le Monde, 30 January, 2017.
Jean-Éric Hyafil, “Commentaires sur le ‘revenu universel’ de Thomas Piketty” [Comments on Thomas Piketty’s universal income’], Le Mouvement Francais pour le Revenu de Base, 2 February, 2017.
Adrien Sénécat, “Revenu universel : Valls et Hamon se disputent la référence à Piketty” [Universal income: Valls and Hamon disagree over Piketty’s reference], Le Monde, 26 January, 2017.
Stanislas Jourdan, “FRANCE: Pro basic income candidate set to win socialist primary election”, Basic Income News, 25 September, 2016.
Genevieve Shanahan, “FRANCE: Hamon becomes Socialist Party presidential candidate following basic income-focused campaign”, Basic Income News, 30 January, 2017.
Photo: Thomas Piketty, CC 2.0 Universitat Pompeu Fabra
After the resounding commercial and critical success of Thomas Piketty’s book “Capital in the twenty-first century”, the author himself responded, in the form of an article in the latest release of Basic Income Studies, to critics and to proponents of Basic Income (BI). As Michael Howard puts it in the introductory paper of the referred edition of Basic Income Studies, “he is wary (…) of treating a cash transfer as a ’magic bullet’.”. However, Thomas Piketty has been a defender of progressive taxation and some forms of BI ever since 1997, particularly the negative income tax (NIT). Although he remains consistent with his prior views on the role of the welfare state, he supports “universal cash transfers for dependent children” and “basic income for all adults with insufficient market income.” Nevertheless despite disagreements, he views basic income as a valid subject of discussion.
In the same Basic Income Studies volume, other authors discuss Piketty’s book from various perspectives. For instance George Grantham evaluates whether Piketty’s view can be reconciled with mainstream economics, while acknowledging that capitalism is surely compatible with a modest basic income. Also Louise Haagh in her article underscores, like Piketty, that BI is not a magic bullet, but indeed an important component for a progressive agenda which promotes social equality and development. In turn, Karl Widerquist stresses that not only entrepreneurs have a tendency to become rentiers but also that inequality depends both on the difference between the rate of return of capital and growth rate of the economy (the famous “r > g” inequality) but also on how much capitalists actually spend in the economy. He adds that, besides progressive taxation, resource taxes should also be imposed, coupled with some form of resource dividend or basic income.
All these authors, among some others that also shared their views on “Capital in the twenty-first century” in the latest issue of Basic Income Studies (Ruben Lo Vuolo, Geoff Crocker and Harry Dahms), essentially agree that social problems are caused by inequality and that new forms of redistribution (or reinforcement of present forms) are essential to restore social balance, or at least reduce inequality for the time being. In the background, remaining to be addressed is the dark cloud of political control, at the moment very much tilted towards the wealthiest members in our society.
Basic Income Studies (cover)
More information at:
Thomas Piketty, “Le Capital au XXIe siècle [Capital in the twenty-first century]“, Catalogue Sciences Humaines et Documents SEUIL.com, September 2013
Ed. by Haagh, Anne-Louise / Howard, Michael, “Basic Income Studies“, De Gruyter, 2015
Credit picture CC Universitat Pompeu Fabra