by Kate McFarland | Jul 25, 2017 | News
Facebook founder and CEO Mark Zuckerberg has recently been traveling the United States on a listening tour, during which he aspires to visit every state in which he has not previously spent time, learning about the concerns and perspectives of residents. While in Alaska, Zuckerberg mentioned the state’s Permanent Fund Dividend (PFD) in a Facebook post, calling a “form of basic income” and commending it as a model for social welfare policy [1]:
Alaska has a form of basic income called the Permanent Fund Dividend. Every year, a portion of the oil revenue the state makes is put into a fund. Rather than having the government spend that money, it is returned to Alaskan residents through a yearly dividend that is normally $1000 or more per person. That can be especially meaningful if your family has five or six people.
This is a novel approach to basic income in a few ways. First, it’s funded by natural resources rather than raising taxes. Second, it comes from conservative principles of smaller government, rather than progressive principles of a larger safety net. This shows basic income is a bipartisan idea.
This post was Zuckerberg’s second public commendation of the idea of basic income. During his Harvard commencement address on May 25, Zuckerberg recommended exploring the policy, stating, “We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.”
In general, Zuckerberg’s remarks on the PFD were well received by the basic income community, who welcomed the high-profile endorsement and opportunity to raise awareness of the PFD, which is widely perceived as evidence that a basic income can be practically implemented. (For more on Alaska’s PFD, including recent updates, see “ALASKA, US: Survey shows support for Permanent Fund Dividend amid continued legal controversy” in Basic Income News.)
Some commentators, however, were less sanguine. Writers like Clio Chang (in New Republic) and Sonia Sodha (in The Guardian) worry that Zuckerberg–like many right-wing and libertarian supporters of basic income–sees the policy primarily as an excuse to cut other programs, as evidenced by his praise for “conservative principles of smaller government” and apparent opposition to raising taxes, which might leave many low-income Americans worse off.
Despite speculation that the tech billionaire is contemplating a 2020 run for US President, Zuckerberg denies that he is running for public office, maintaining that his tour of the US is only a means to broaden his perspective and understand his customers.
Photo: CC BY-NC-ND 2.0 kris krüg
by Kate McFarland | Jul 24, 2017 | News
A new local basic income group in the United States–based in New Orleans (a.k.a. the “BIG Easy”)–was formed in summer 2017 and is currently holding monthly meetings.
The group is led by Scott Santens, a well-known basic income write and advocate as well as the treasurer of BIEN’s US affiliate, US Basic Income Guarantee, Inc (USBIG).
Meetings are currently being held on the last Wednesday of every month, with discussion oriented around the general topic of what can be done to advance basic income on both local and national levels.
For more information and updates, see the New Orleans Basic Income Meetup page: https://www.meetup.com/New-Orleans-Basic-Income-Meetup/.
In additional to nationwide networks like USBIG and Basic Income Action, the US is home to several basic income advocacy groups that are active on a local level, including groups based in New York, Minneapolis, San Francisco, and Seattle.
Photo: the street where the New Orleans basic income meet-ups are being held (photographed by Kate McFarland during the New Orleans Basic Income Create-a-thon).
by Kate McFarland | Jul 22, 2017 | News
The Universal Income Project, a basic income advocacy group headquartered in San Francisco, is hosting a Q&A with California state senator Bob Wieckowski on basic income and carbon dividends.
This free public event will take place on July 25 at Covo, a coworking space in San Francisco.
Bob Wieckowski, CC BY 2.0 Internet Association
Wieckowski, along with Senate President Pro Tempore Kevin de León, was a sponsor of Senate Bill 775 (SB 775), introduced earlier this year, which proposed to revise the state’s carbon cap-and-trade program and institute a small basic income in the state.
Under SB 775, a portion of the new carbon revenue would be directed towards a newly created California Climate Dividend Program, which would distribute quarterly cash payments to all individual residents of California. The bill proposed a Climate Dividend Access Board to work with state officials to develop a mechanism to deliver the quarterly dividends (see the previous Basic Income News article “California State Legislature to Consider Carbon Dividend”).
Many American proponents of basic income see a carbon dividend, such as that proposed by SB 775, as a politically feasible stepping stone to a universal basic income of a livable amount.
At present, however, California is unlikely actually to adopt such a policy: on Monday, July 17, the state legislature voted to extend the state’s current carbon cap-and-trade program, which had been set to expire in 2020, through 2030. This program does not include a dividend.
For more information about the Q&A with Bob Wieckowski, see Eventbrite and Facebook.
Top photo: Coal power plant in southern California, CC BY 2.0 Rennett Stowe.
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.
If you would like to learn more about Topher Brennan, you can visit his web site: www.topherbrennan.com
or
Follow him on social media:
@TopherTBrennan
facebook.com/topher.t.brennan
by Benjamin Sadlek | Jul 16, 2017 | News
(Former Republican House Majority Leader Eric Cantor speaking at the American Enterprise Institute. Credit to: The Washington Post)
The American Enterprise Institute, a conservative think tank, released a piece of research in late May, which was an attempt to analyze the effect of the implementation of a universal basic income (UBI) on the current American social welfare system.
The proposal has been released as a working paper, meaning in this case a preliminary research paper with incomplete considerations, but a base model nonetheless to move forward with and make improvements.
The Basic Proposal
The paper’s proposal is a budget-neutral form of a UBI, meaning instead of implementing a basic income in addition to the existing American social welfare system; most existing programs like Medicaid, Veteran’s Benefits, and Social Security for the elderly over 65 are repealed and replaced with a UBI. Using data from the Federal government’s budget outlays from 2014, the paper finds that the repeal of large programs in America would yield about $2.54 trillion dollars. In addition to this, the proposal repeals 23 different tax benefits like the Student Loan interest deduction and Earned Income Tax credit, bringing in more revenue and freeing up a grand total of about $3.21 trillion for a UBI.
With additional taxes coming in from the UBI itself, and increased tax liabilities on all income tax brackets, the proposal finances and prescribes a basic income of $13,788 for individuals over the age of 18 and $6,894, or half the income of adults, for individuals under the age of 18.
Using Federal government tax data, the paper analysis the net benefit gain or loss by tax bracket and age. Using the parameters described, the findings show that some of the most adversely affected by this system are in the lowest tax bracket ($0-$10,000). This is unsurprising, because many of the programs this proposal had repealed to finance the basic income are concentrated on this tax bracket.
Another group adversely affected by this proposal are individuals 65 and older, also because their benefits, such as Social Security, have been repealed and distributed among the rest of the population. When excluding age groups of 65 and older, however, nearly all tax brackets see a net benefit in this proposal, with the brackets seeing the greatest benefits being those in the middle.
Assessing the Real Value of Welfare Dollars
The second section of the paper attempts to add in the variable of welfare multiples to estimate the real cost and benefit to this proposal. Welfare multiples try to calculate the value of each dollar the government spends to the value by the welfare recipient for each government welfare program. The value of the welfare recipient comes from the idea that funds allocated by a government program are not always as valuable as cash (for example, if a family receives funds allocated for food by SNAP, but would rather use a portion of those funds for other purposes). A good government program would have a welfare multiple close to 1, while a bad government program would have a welfare multiple closer to 0.
Essentially, this section attempts to use welfare multiples to assess the gains in efficiency made in eliminating government waste by allowing people to spend the money how they see fit, or giving them a cash payment as they would have with a basic income.
The paper draws from current literature that estimates the welfare multiple of some government programs, but the authors admit to having to estimate others (see referenced literature for welfare multiples in working paper). They range from more wasteful programs like Medicaid (around .30, as used by this proposal) to less wasteful programs like Veteran’s Benefits (around .95, as used by this proposal). The literature on welfare multiples shows that there are various estimates on how effective these programs are, and therefore other authors may come up with slightly different welfare multiples. The ones employed by the authors in this proposal are an approximation based on different estimates.
When adding the welfare multiples into the equation, the net loss in benefits for the lowest tax bracket is reduced by about $4 thousand dollars per tax unit, though there is still a net loss in benefits. In addition, benefit losses to the tax brackets aged 65 and older are decreased, but by a lower margin than the lowest tax bracket as the welfare multiple is higher for these government programs. This means that the greatest increase in efficiency by implementing a UBI would be in the lowest tax bracket.
Review of the Findings
The important findings in this proposal from the American Enterprise Institute show that, if a UBI were to merely replace the existing social welfare system in the United States, by repealing existing welfare programs and tax benefits, there would be an overall redistributive impact from the old to the young, and from the poor to the middle class; though there would be a gain in efficiency overall.
Again, this is not a surprising finding as the goal of redistributive programs in America is to allocate taxpayer dollars mainly to the poor and the elderly. Some programs allocate funds too stringently, as the welfare multiples try to demonstrate, and sometimes it may be better for a welfare recipient to merely receive a cash payment. While in this proposal of a UBI the overall efficiency is increased, it does not compensate for the net loss in benefits to the poor and the elderly.
It is worth noting that the American Enterprise Institute espouses classical liberal values of entrepreneurship and free enterprise, as expressed on their website. One of their main interests in exploring a UBI, therefore, is to eliminate government waste, but this may also mean increasing the freedom of welfare recipients to make financial decisions that make sense to them.
One area the paper could do better in is to explain with detail how the repeal of tax provisions increased tax liabilities for different brackets and age groups. In their base model, to help finance the UBI, the paper repealed several tax provisions, which brought the average tax liability for the second tax bracket ($10,000-$20,000) to around $6,714, or on average 45% of their income. The average increase in tax liability for the tax bracket of $200 thousand to $1 million, on the other hand, is $28,425, or on average 4% of their income. The increase in tax liability that helps finance this proposal, therefore, is falling mainly on the lower tax brackets and individuals over 65.
In future research, proposals like this could examine the current tax code with more detail, and how it could be restructured to help finance a UBI. Because most of the new tax burden in this proposal seems to be falling on the lowest tax brackets and the elderly, there should be a conversation about who needs to be bearing the new tax burden, and how much that should be.
Notably, the paper admits that it does not take into account behavioral changes that would take place with the implementation of UBI. Proposals like this could potentially include insights from other basic income projects like the Mincome experiment in Canada, which revealed increases in high school graduation rates, and a drop of health care costs.
It is fair to be wary of the intentions of the AEI in releasing this working paper, but clearly a fair amount of effort was put into it, and it appears to be an honest inquiry into the subject. Finally, it is worth saying that the proposal is only a particular vision of a basic income, one that may not agree with many other visions, but research such as this may nonetheless come across some useful insights.
More information at:
https://www.aei.org/publication/a-budget-neutral-universal-basic-income/
