Michael Howard. Picture credit to: University of Maine
Michael Howard, a professor of Philosophy and Political economy at the University of Maine, who also specializes in environmental issues, has published an article on how a carbon fee and dividend might help to solve an impending climate disaster.
In this article, Howard speaks of a recent bill (November 2018), introduced to the House of Representatives of the United States, supported by Democrats and Republicans, “that would reduce CO2 emissions [from the US] by 40% in 12 years, and 90% by 2050”. Called the “Energy Innovation and Carbon Dividend Act”, it aims to impose a 10 US$/metric tonne fee on carbon fuels produced or imported, rising to 15 US$/metric tonne, if the referred CO2 emissions goals are not fulfilled.
The generated revenue would be saved at a Carbon Dividend Trust Fund, and be unconditionally redistributed annually to all US citizens. Estimated point to a US$ 3456/year for a family of four (as an example). Of course, fuel prices would go up, but according to the Regional Economic Models Inc (REMI), “most households would receive more in cash dividends than they would pay in higher fuel costs”. That and an estimated amount of 2.1 million extra jobs over 10 years, and reduced mortality in 20 years (due to declining air pollution).
If the bill is passed, present-day authority of the US Environmental Protection Agency (EPA) over carbon emissions will be suspended, but only to be re-installed if CO2 reduction goals are not met. Nevertheless, the expectation is that this Energy Innovation and Carbon Dividend Act will reduce carbon emissions from the US “far more than the Obama administration’s Clear Power Plan”. On social grounds, according to Howard, the bill is progressive, as far as taxation is concerned, and the dividend is fair and acceptable by the public at large.
Alexandria Ocasio-Cortez. Picture credit to: The Daily Beast.
Alexandria Ocasio-Cortez, a young Democrat MP who has recently included basic income in a Resolution about climate change (coined the “Green New Deal”), has also mentioned it at a Netroots Nation event in August 2018. The mention is very brief and grouped with “universal college, education, trade school [and a] Federal Jobs Guarantee”, which had been in and out of the Democrats agenda since the 1940’s.
The Democrats political platform does not mention basic income, despite recent efforts by Ocasio Cortez (with the above-mentioned Resolution), although it goes through a lot of policies for low-income workers and families. However, it hints at an expansion of current social security programs, enhancing their range towards universality, as in the following passage:
“The Earned Income Tax Credit (EITC) program should be expanded for low-wage workers not raising children, including extending the credit to young workers starting at age 21. The Child Tax Credit (CTC) should be expanded, for example, by making more of it refundable, or indexed to inflation to stem the erosion of the credit.”
A new working paper released by Growthpolicy, which disseminates research by Harvard scholars on the topics of economic growth, employment, and inequality, argues that a universal basic income is superior to current low wage subsidies in several ways. The author, Associate Professor of Economics at Harvard, Dr. Maximilian Kasy contends that these subsidies, specifically the Earned Income Tax Credit (EITC) in the United States, comparatively carries several economic, moral, and political disadvantages.
The EITC is a subsidy to low income working families and increases with income to specific thresholds, depending on household size. The credit has been found to incentivize work, reduce welfare dependency, improve child health and educational outcomes, and lifts roughly 6.5 million people above the official poverty line. Kasy argues that a basic income could produce similar outcomes while eliminating several important drawbacks. First, because the demand for labor is finite, especially in times of recession, incentivizing some workers to work more, which ultimately creates fewer jobs overall. In other words, if a service sector employee works overtime hours in order to maximize the EITC credit, her employer will not need to hire an additional employee to cover those hours. Further, multiple researchers have found that subsidizing low wage work via the EITC plus cuts to traditional welfare, in the 1990s, decreased pressure on employers to offer a living wage and ultimately contributed to the declining value of the minimum wage. In essence, Kasy argues, the EITC is a subsidy to employers. Conversely, a UBI would increase the bargaining power of workers and wages would thusly rise.
Dr. Kasey also asserts that a basic income would reduce the coercive power that employers, abusive partners, and a paternalistic welfare system hold over economically marginalized populations. Low wage workers, survivors of domestic violence, and mothers at the mercy of intrusive welfare policy would have an increased ability to walk away from exploitative situations. Furthermore, a basic income would fairly compensate child and elder care work, which is largely done by women and goes unrewarded in our current wage-based system.
Finally, as many have argued, Dr. Kasey finds that a universal basic income carries potentially greater political stability than means-tested benefits. For example, while the passage of Social Security in the 1930s and Medicare in the 1960s was met with cries of “Socialism!,”, these were soon widely popular across the political spectrum and are rarely considered as potential areas for federal budget cuts.
It started on Tuesday, 13th of November 2018, with a 200 large committee of environmental activists (Sunrise Movement) crowding Nancy Pelosi‘s office premises at the Capitol Building. The activists called upon Pelosi, the Democrats House speaker, to push for a real, ambitious and wide-reaching plan to curb climate change. That alone would probably amount to little as far as media coverage was concerned. However, the event was mediatized by recently elected Democrat MP and young political leader Alexandria Ocasio-Cortez, who stepped in and weighted her support, attracting lots of media attention.
What first seemed to be the aftermath of yet another Democrat internal dispute over climate change issues, turned out to be a positive reinforcement between Democratic leaders to start pushing for a deep strategy which can eventually set real policy to solve the climate crisis. Recent Pelosi efforts to revive energy independence and global warming related issues in the Househad turned out inconsequential, which only made the new Resolution presented by Alexandria stand out even more.
This Resolution aims to have a so called “Plan for a Green New Deal” ready by no later than January 1st 2019, and a final draft legislation by April 1st 2019 (with a proviso that it should not be extended, under any circumstance, further than March 1st 2020). This plan, supported by both the Sunrise Movement activist group and the Justice Democrats (a pioneering partnership), ambitiously aims to completely decarbonize the US economy, ramp up renewables to 100% and eliminate poverty in all United States within a 10 year timespan.
The ending poverty part of the plan starts with the provision of a job guarantee, coupled with training and education opportunities for all Americans, to assist in the transition to abetter (for most people), decarbonized economy. The concept of a job guarantee had already been given attention by Democrat “heavy-weights” like former President Obama and his Vice Joe Biden, putting an emphasis on its (alleged) non-monetary advantages (at least in the United States context) – e.g.: dignity, sense of purpose, recognition. However, basic income has appealed to Democrats in the last few years (adding Bernie Sanders and even Hillary Clinton into the pot), and so it appears under number four of Alexandria’s plan, after the taking care of disadvantaged communities affected by climate change, and reducing deep inequalities – racial, regional, gender-based, income and access to infrastructure – within the territory. With climate change impacting the world’s poorest much more than the world’s richest, it’s no wonder that people are turning to social justice lawyers for compensation. Lawtx.com already offers these services, and as climate change becomes more acute, it’s likely that we’ll be seeing more lawsuits in the future.
However, and according to basic income activists such as Guy Standing, Scott Santens and Annie Miller, basic income could have an important role precisely in addressing the issues faced by those who are impacted the most.
The Resolution clearly states that environmental issues cannot be separated from social/economic problems, hence the focus on both. Such deep connection has already been considered and analysed by several thinkers of our time, such as Phillipe van Parijs, André Gorz and Charles Eisenstein. Therefore, the moment in time, the nature of the document and its content seems to be aligned with the demands of today’s crisis, particularly in the United States. Finally, on the financial side of the Resolution, the idea is to use Federal Reserve funds, the foundation of a new public bank and/or theuse of public venture funds to cover for the Plan’s expenses, hence focusing on public finances and asset management. That certainly appeals more to a Commons-oriented solution to environmental and social issues, rather than a private-donor type of approach such as a few coming from Silicon Valley recently.
City Leaders attendees in L.A. at City Summit. Credit to: NLC.
The National League of Cities (NLC), an organization serving the interests of 19000 cities, towns and villages across the United States territory, has released, in a partnership with the Stanford Basic Income Lab (BIL), a basic income report to serve as guide to piloting UBI in cities. Framed as a toolkit, it is directed at city leaders and aims to guide policy rather than blueprint UBI pilots. It is intended to help cities considering introducing basic income experiments, providing historical background, prior experiment reports and results and present-day efforts in that regard.
The UBI is seriously contemplated by the NLC as a possible solution – although not a panacea – to growing automation, labour precariousness and peaking inequality. Basic income is also seen as an effective way to boost entrepreneurship, while providing a solid safety net. City leaders are conscient, though, that cities are limited in their ability to introduce basic income schemes, as they are part of wider nation-state organizations and governments. However, cities can act as experimental grounds to provide results and identify hurdles, both crucial aspects of an eventual nation-wide UBI implementation.
The basic income toolkit for cities is also meant to be a piece in what has been called a Theory of Change (ToC). A ToC is a study built as a roadmap to introduce meaningful change to a complex system such as a city. It is designed to help cities articulate their short, medium and long-term goals, and, within this context, draw important and already available outcomes from unconditional cash-transfer programs. Conversely, the ToC helps in calibrating the UBI experiment, informing on which data to collect, and when.
In a nutshell, the basic income report for UBI experiments in cities issues recommendations on identifying the goals (of the experiment), choosing those involved and when these should participate, defining the choice of recipients, specifying how to measure success and creating an effective communication strategy.
