Basic income

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This article is about a system of unconditional income to every citizen. For more specific proposals financed on the returns on publicly owned enterprises, see social dividend. For social welfare based on means tests, see Guaranteed minimum income.
Not to be confused with minimum wage or living wage.
On 4 October 2013, Swiss activists from Generation Grundeinkommen organized a performance in Bern in which roughly 8 million coins, one coin representing one person out of Switzerland's population, were dumped on a public square. This was done in celebration of the successful collection of more than 125,000 signatures, forcing the government to hold a referendum on whether or not to incorporate the concept of basic income in the Federal constitution. The measure did not pass, with 76.9% voting against basic income.[1]

A basic income (also called unconditional basic income, Citizen's Income, basic income guarantee, universal basic income or universal demogrant[2]) is a form of social security[3] in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.

An unconditional income transfer of less than the poverty line is sometimes referred to as a partial basic income.

Basic income systems that are financed by the profits of publicly owned enterprises (often called social dividend or citizen's dividend) are major components in many proposed models of market socialism.[4] Basic income schemes have also been promoted within the context of capitalist systems, where they would be financed through various forms of taxation.[5]

Similar proposals for "capital grants provided at the age of majority" date to Thomas Paine's Agrarian Justice of 1795, there paired with asset-based egalitarianism. The phrase "social dividend" was commonly used as a synonym for basic income in the English-speaking world before 1986, after which the phrase "basic income" gained widespread currency.[6] Prominent advocates of the concept include Philippe Van Parijs, Ailsa McKay,[7] André Gorz, Hillel Steiner, Peter Vallentyne, Guy Standing and Rutger Bregman.

Policy aspects[edit]

Transparency[edit]

Basic income, it is argued,[8] is a much more transparent and simple welfare system than the one existing in the welfare states around the world today. Instead of numerous welfare programs it would be one universal unconditional income.

Administrative efficiency[edit]

The lack of means test or similar administration would allow for some saving on social welfare which could be put towards the grant. The Basic Income Earth Network (BIEN) describes one of the benefits of a basic income as having a lower overall cost than that of the current means-tested social welfare benefits,[9] and they have put forth proposals for implementation they claim to be financially viable.[10]

Poverty reduction[edit]

Basic income is often argued for[by whom?] because of its potential to reduce poverty, and even eradicate poverty.[citation needed]

Basic income and growth[edit]

Basic income and growth (or BIG) allows for potential economic growth: people may decide to invest in themselves to earn higher degrees and get interesting and well-paid jobs that, in turn, could trigger growth.[11][12] As Jason Burke Murphy argues, a substantial discussion has grown over recent years about whether basic income could be a part of a degrowth-agenda.[13]

Freedom[edit]

Philippe Van Parijs

Supporters commonly make three very different arguments that Basic Income promotes freedom. First, although most Basic Income supporters tend to be politically left, right-leaning supporters, at least since the 1970s, have argued that policies like Basic Income free welfare recipients from the paternalistic oversight of conditional welfare-state policies. Second, Philippe Van Parijs has argued that basic income at the highest sustainable level is needed to support real freedom, or the freedom to do whatever one "might want to do."[14] By this, Van Parijs means that all people should be free to use the resources of the Earth and the "external assets" people make out of them to do whatever they might want to do. Money is like an access ticket to use those resources, and so to make people equally free to do what they might want to do with the external assets of the world, the government should give each individual as many such access tickets as possible—that is, the highest sustainable Basic Income.

Third, at least since Thomas Paine, some supporters have argued that Basic Income is needed to protect the power to say no, which these supporters argue is essential to an individual's status as a free person. If some other group of people controls resources necessary to an individual's survival, that individual has no reasonable choice other than to do whatever the resource-controlling group demands. Before the establishment of governments and landlords, individuals had direct access to the resources they needed to survive. But today, resources necessary to the production of food, shelter, and clothing have been privatized in such a way that some have gotten a share and others have not. Therefore, this argument goes, the owners of those resources owe compensation back to non-owners, sufficient at least for them to purchase the resources or goods necessary to sustain their basic needs. This redistribution must be unconditional because people can consider themselves free only if they are not forced to spend all their time doing the bidding of others simply to provide basic necessities to themselves and their families.[12] Under this argument, personal, political, and religious freedom are worth little without the power to say no. In this view, basic income provides an economic freedom which, combined with political freedom, freedom of belief, and personal freedom establish each individual's status as a free person.

Work incentives[edit]

There is also a belief among critics that if people have free and unconditional money they will not work (as much) and get lazy.[15][16][17] Less work means less tax revenue and hence less money for the state and cities to fund public projects. There are also concerns that some people will spend their basic income on alcohol and drugs.[12][18]

If there is a disincentive to employment because of basic income, it is however expected that the magnitude of such a disincentive would depend on how generous the basic income were to be. Some campaigners in Switzerland have suggested a level that would only just be liveable, arguing that people would want to supplement it.[19]

Tim Worstall, a writer and blogger, has argued that traditional welfare schemes create a disincentive to work, because such schemes typically cause people to lose benefits at around the same rate that their income rises (a form of welfare trap where the marginal tax rate is 100 percent). He has asserted that this particular disincentive is not a property shared by basic income as the rate of increase is positive at all incomes.[20]

In one study, even when the benefits are not permanent, the hours worked—by the recipients of the benefit—are observed to decline by 5 percent, a decrease of two hours in a typical 40-hour work week:

While experiments have been conducted in the United States and Canada, those participating knew that their benefits were not permanent and, consequently, they were not likely to change their behaviour as much or in the same manner had the GAI been ongoing. As a result, total hours worked fell by about five percent on average. The work reduction was largest for second earners in two-earner households and weakest for the main earner. Further, the negative work effect was higher the more generous the benefit level.[16]

However, in studies of the Mincome experiment in rural Dauphin, Manitoba, in the 1970s, the only two groups who worked significantly less were new mothers and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling.[21] Under Mincome, "the reduction of work effort was modest: about one per cent for men, three per cent for wives, and five per cent for unmarried women."[22]

Another study that contradicted such decline in work incentive was a pilot project implemented in 2008 and 2009 in the Namibian village of Omitara; the assessment of the project after its conclusion found that economic activity actually increased, particularly through the launch of small businesses, and reinforcement of the local market by increasing households' buying power.[23] However the residents of Omitara were described as suffering "dehumanising levels of poverty" before the introduction of the pilot,[24] and as such the project's relevance to potential implementations in developed economies is not known.

Affordability[edit]

The affordability of a basic income proposal relies on many factors such as the costs of any public services it replaces, tax increases required, and less tangible auxiliary effects on government revenue and/or spending (for example a successful basic income scheme may reduce crime, thereby reducing required expenditure on policing and justice.)

Key principles[edit]

The case for basic income affordability can be summarized this way:

  • Welfare substitution: Basic income would substitute to a wide range of existing social welfare programmes, tax rebates, state subsidies and work activation spendings. All those budget (including administrative costs) would be reallocated to finance basic income
  • Auto-financing of basic income: although basic income is paid to everyone universally, most people whose earnings are above the median income are in fact net contributors to the basic income scheme, mainly through an income tax. In practice this means that the net cost of basic income is much lower than the raw cost calculated as a sum of monthly payements to the whole population.
  • More fiscal redistribution: in addition to reforming and optimizing the existing tax systems, additional taxations can be implemented to fully finance a basic income scheme. Some proposals frequently mention to this effect the need for a tax on capital, carbon tax, financial transaction tax etc. which do not currently exist in most jurisdictions.
  • Money creation: In addition to tax reforms, the power of central banks to create money could be used as one funding channel for basic income.

Case studies[edit]

A 2012 affordability study done in the Republic of Ireland by Social Justice Ireland found that basic income would be affordable with a 45 percent income tax rate. This would lead to an improvement in income for the majority of the population.[25] Charles M.A. Clark estimates that the United States could support a Basic Income large enough to eliminate poverty and continue to fund all current government spending (except that which would be made redundant by the Basic Income) with a flat income tax of just under 39 percent.[26]

Paul Mason stated that universal basic income would increase social security costs, but that it would also reduce the high medical costs associated with diseases of poverty, by reducing stress, diseases like high blood pressure, type II diabetes etc. would become less common.[27]

C. H. Douglas called for financing a basic income with created money. In a 1935 speech,[28] Douglas said:

We believe that the most pressing needs of the moment could be met by means of what we call a National Dividend. This would be provided by the creation of new money - by exactly the same methods as are now used by the banking system to create new money - and its distribution as purchasing power to the whole population. Let me emphasise the fact that this is not collection-by-taxation, because in my opinion the reduction of taxation, the very rapid and drastic reduction of taxation, is vitally important.

Pilot programs[edit]

Main article: Basic income pilots

The Permanent Fund of Alaska is well established and is perhaps to be seen as a permanent system, rather than a basic income pilot. The same could perhaps be said about Bolsa Família also. Leaving those two big systems apart, these are some of the most well known basic income pilots up to date.

  • The experiments with negative income tax in United States and Canada in the 1960s and 1970s.
  • The experiments in Namibia (starting 2008)
  • The experiment in Brazil (starting 2008)[29]
  • The experiments in India (starting 2011)
  • The GiveDirectly experiment[30]
  • The study in rural North Carolina[31]
  • Utrecht, Netherlands, 2015 experiment
  • In 2016 Ontario, Canada announced plans to run a basic income pilot, with a discussion paper on the program expected in fall
  • A town in Manitoba, Canada experimented with a basic guaranteed income in the 1970s[32]

Basic income and ideology[edit]

Economic perspectives[edit]

Erik Olin Wright, 2013.

Economists and sociologists have advocated a form of basic income as a means for distributing the economic profits of publicly owned enterprises to benefit the entire population (also referred to as a social dividend), where the basic income payment represents the return to each citizen on the capital owned by society. These systems would be directly financed out of returns on publicly owned assets and are featured as major components of many models of market socialism.[4] Erik Olin Wright, for example, characterizes basic income as a project for reforming capitalism into an economic system by empowering labor in relation to capital, granting labor greater bargaining power with employers in labor markets, which can gradually de-commodify labor by decoupling work from income. This would allow for an expansion in scope of the "social economy", by granting citizens greater means to pursue activities (such as the pursuit of the arts) that do not yield strong financial returns.[33]

Other theorists leaning towards different kinds of basic income economic perspectives who have advocated basic income include James Meade, Bertrand Russell, Frances Fox Piven and Harry Shutt. Meade states that a return to full employment can only be achieved if, among other things, workers offer their services at a low enough price that the required wage for unskilled labor would be too low to generate a socially desirable distribution of income. He therefore concludes that a citizen's income is necessary to achieve full employment without suffering stagnant or negative growth in wages.[34] James Meade advocated for a social dividend scheme to be funded by publicly owned productive assets.[35] Russell argued for a basic income alongside public ownership as a means to decrease the average length of the working day and to achieve full employment.[36] Fox Piven holds the view that an income guarantee would benefit all workers by liberating them from the anxiety that results from the "tyranny of wage slavery" and provide opportunities for people to pursue different occupations and develop untapped potentials for creativity.[37] Gorz saw basic income as a necessary adaptation to the increasing automation of work, but also a way to overcome the alienation in work and life and to increase the amount of leisure time available to each individual.[38] Harry Shutt proposed basic income along with reforms to make all or most of the enterprises collective in nature, rather than private. Together, he argued, these measures would constitute the make-up of a post-capitalist economic system.[39]

Georgist views[edit]

Geolibertarians seek to synthesize propertarian libertarianism and a geoist (or Georgist) philosophy of land as unowned commons or equally owned by all people, citing the classical economic distinction between unimproved land and private property. The rental value of land is produced by the labors of the community and, as such, rightly belongs to the community at large and not solely to the landholder. A land value tax (LVT) is levied as an annual fee for exclusive access to a section of earth, which is collected and redistributed to the community either through public goods, such as public security or a court system, or in the form of a basic guaranteed income called a citizen's dividend. Geolibertarians view the LVT as a single tax to replace all other methods of taxation, which are deemed unjust violations of the non-aggression principle.

Right-wing views[edit]

Support for basic income has been expressed by several people associated with right-wing political views. While adherents of such views generally favor minimization or abolition of the public provision of welfare services, some have cited basic income as a viable strategy to reduce the amount of bureaucratic administration that is prevalent in many contemporary welfare systems. Others have contended that it could also act as a form of compensation for fiat currency inflation.[40][41][42]

Feminist views[edit]

Feminists' views on the basic income can be loosely divided into two opposing views: one view which supports basic income, seeing it as a way of guaranteeing a minimum financial independence for women, and recognizing women's unpaid work in the home; and another view which opposes basic income, seeing it as having the potential to discourage women from participating in the workforce, and to reinforce traditional gender roles of women belonging in the private area and men in the public area.[43][44]

Technological unemployment[edit]

Concerns about automation and other causes of technological unemployment have caused many in the high-tech industry to turn to basic income proposals as a necessary implication of their business models. Journalist Nathan Schneider first highlighted the turn of the "tech elite" to these ideas with an article in Vice magazine, which cited figures such as Marc Andreessen, Sam Altman, Peter Diamandis, and others.[45] The White House, in a report to Congress, has put the probability at 83% that a worker making less than $20 an hour in 2010 will eventually lose their job to a machine. Even workers making as much as $40 an hour face odds of 31 percent.[46]

Criticism[edit]

Discussion of a basic income can be found both in the economics literature in public policy debates in the political arena.

Economics research[edit]

Major Western economies today are managed to maintain a large army of unemployed to discipline the demands of labor, which they believe would increase inflation. A primary tool in this regard is the NAIRU (non-accelerating inflation rate of unemployment): The theory is that unemployment below that level will presumably drive up inflation.

Proponents of modern monetary theory recommend a job guarantee as an alternative.

Daron Acemoğlu, who has expressed uncertainty about his views on basic income has stated "Current US status quo is horrible. A more efficient and generous social safety net is needed. But UBI is expensive and not generous enough."[47] Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare."[48] The Economist notes that raising the income floor would have no impact on the wealth gap. While cash transfers would make the most difference to those on the bottom of the pile, they posit it would be instead of existing welfare benefits.[49]

Political debate[edit]

A commission of the German parliament discussed basic income in 2013 and concluded that it is "unrealizable" because:[50][51]

  • it would cause a significant decrease in the motivation to work among citizens, with unpredictable consequences for the national economy
  • it would require a complete restructuring of the taxation, social insurance and pension systems, which will cost a significant amount of money
  • the current system of social help in Germany is regarded more effective because it's more personalized: the amount of help provided is not fixed and depends on the financial situation of the person; for some socially vulnerable groups the basic income could be insufficient
  • it would cause a vast increase in immigration
  • it would cause a rise in the shadow economy
  • the corresponding rise of taxes would cause more inequality: higher taxes would translate into higher prices of everyday products, harming the finances of poor people
  • no viable way to finance basic income in Germany was found

Worldwide[edit]

Main article: Basic income around the world

Generally the discussion on basic income developed in Europe in the 1970s and 1980s, partly inspired by the debate in United States and Canada somewhat earlier, and has since then broadened to most of the developed world, to Latin America, Middle East, and to at least some countries in Africa and Asia. The Alaska Permanent Fund is regarded as one of the best examples of an existing basic income, even though it's only a partial basic income. Other examples of existing basic income, or similar welfare programs, include the partial basic income in Macao and the basic income in Iran. Basic income pilots, such as Mincome, have been conducted in United States and Canada in the 1960s and 1970s, Namibia (from 2008) and in India (from 2011). In Europe there are political decisions in France, Netherlands and Finland to start up some basic income pilots. Voters in Switzerland strongly defeated a referendum on the topic in 2016 with 77 percent voting against the proposal.[52]

Advocates[edit]

Guy Standing, UK.
Hugh Segal, Canada
Susanne Wiest, Germany
Andrew Little, New Zealand

Europe[edit]

  • Enno Schmidt, German Artist, cofounder Suisse UBI Initiative.

The United States and Canada[edit]

Asia, Africa, Latin America, Oceania[edit]

Historical advocates include the Thomas Paine, a philosopher who ranks as one of the "founding fathers" of the United States[113] and civil rights leader Martin Luther King, Jr.[114]

Petitions and referendums[edit]

  • In 2008 an official petition for basic income was started in Germany by Susanne Wiest.[115] The petition was accepted and Susanne Wiest was invited for a hearing at the German parliament's Commission of Petitions. After the hearing, the petition was closed as "unrealizable".[50]
  • In 2015, a citizen's initiative in Spain received 185,000 signatures, short of the required amount for the proposal to be discussed in parliament.[116]
  • The world's first universal basic income referendum in Switzerland on 5 June 2016 was rejected with a 76.9 percent majority.[1][117]

Public opinions[edit]

In 2016, a poll showed that 58 percent of the European people are aware about basic income and 65 percent would vote in favor of the idea.[118]

See also[edit]

References[edit]

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Further reading[edit]

External links[edit]

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