The transition problem for minimum income policies

P.S. I see UBI as an ALTERNATIVE to union strength in supporting worker rights, and UBI as a step to supporting higher levels of employment (because of more distributed purchasing power, so some of your conflicts are to me just mistaken). But yes establishing political support is the problem – especially as it involves cutting conditional benefits and probably reducing asset values in some way (albeit slowly).

Another way in that comes to mind is of government-issued carbon credits that are, for example, redeemable against petrol taxes and domestic energy taxes initially, and most definitely tradeable. That will set a market value for them, and everyone will get the same amount every year. Govt can introduce additional green taxes or allow carbon credits to be used against, eg. VAT. Not sure how to get to a full UBI/GMI from there, but it may be a start.

Also, just a quick google on Aussie corporate profits for 2010 was closer to 17% of GDP, and also highly volatile. Highly cyclical taxes on corporate profits are not a great fit for a stable, growing UBI or GMI

Although both UBI and GMI are way outside the Overton Window at this time in the US, the GMI is a much harder sell. Even if the numbers are economically equivalent, the optics of a GMI are much worse: you’re specifically giving a handout to people who aren’t working, which is a means-tested benefit. And you’re implicitly doing it at the expense of workers. As the saying goes, programs for the poor are poor programs. A means-tested benefit is far easier to cut back than a universal one: witness Bill Clinton ending welfare as we know it. Means-tested benefits also create perverse incentives, since the effective marginal tax rate can be well over 100% for income that pushes workers out of the program’s range. Even if you ramp down the benefit over a range to avoid it getting quite this bad, it still means that low-income workers feel that they’re getting screwed while non-workers are getting a free ride.

Agree with Josh G. above.

Also, we shouldn’t underestimate the practical costs of means-testing. If you’ve had any contact with income-support programs in the US, you know what an enormous effort — extending to basic program design — goes into preventing fraud. This not only makes the programs much costlier and more cumbersome than they need to be, and excludes many people who meet the fundamental criteria but are deemed ineligible for one reason or another. it also makes getting support extremely time-consuming, humiliating and demoralizing.

I think if we want a feasible utopia, we are much better off with genuinely universal provision of *something*, where the something is as modest as it needs to be to meet your standards of feasibility. Public schools, public parks, public transportation, etc.

Somewhat OT, but I really wish this approach had been taken with health care reform. (And that’s why these discussions matter — they help shape the next big liberal legislative project, which will come along sooner or later.) Instead of building a ramshackle, crazy-quilt system that purports to (tho it doesn’t really) fix the whole problem, why not build a simple, genuinely universal (and generalizable) system that fixes part of the problem. Medicare should have been the model. If Medicare for all isn’t feasible, why not Medicare for kids?

I think part of the problem is a lack of any positive vision of the public sphere as a good in itself. I would like our feasible utopia to be less about redistributing private wealth, and more about expanding collective wealth.

I think a key part of the transition would be to incent successful people with something other than money. Don’t know what that would be … reserved seats at the opera? … but likely it would run counter to the usual left-progressive desire for egalitarianism.

“He who does not work shall not eat” is so deeply ingrained into most cultures that a program that is seen as transferring wealth from people who are seen to stand for the national image [1] to an undeserving lazy outgroup [2] will never be politically viable. For a GMI or UBI to be workable it must be seen either as a payment to everyone due simply because of citizenship [3] or a payment to those who are performing socially desirable [4] but unpaid tasks.

[1] In the US, this would be the kind of people who listen to AM hate radio. The redneck working class isn’t a majority but is viewed as Real America by those who make the decisions. Income redistribution programs (IRPs) that are seen to come at the cost of people who embody the national myth will be a non-starter.

[2] In the US non-whites are, of course, the most hated out group. Immigrants serve the analogous role in Europe. IRPs that are seen to benefit mostly outgroups will be non-viable. For IRPs to work they must be seen as benefiting people who fit into category (1).

[3] Supporting a minimal IRP of the redistribution of resource royalties would allow IRPs to be framed as a benefit of citizenship on the basis that the land belongs to everyone. Getting a foot in the door with a royalties-funded IRP could provide an avenue to expand the program using other funding sources.

[4] Proposing a transitional IRP for artistic endeavors, childcare, charity work, etc, may be successful in cultures that still recognize the value of society as something independent of economic markets. The latter clause excludes the US and UK as they have become parasitic markets that marginally tolerate their host societies rather than societies that are supported by markets. The concept of socially useful but uneconomic tasks is a category error as far as the political cultures of the UK and US are concerned.

“existing beneficiaries have their position unchanged, and no one else has enough to live on”

No one is worse off – so there are plenty of people with enough to live on. And a UBI (even a small one) will act as a wage subsidy for marginal employees. Some people will be better off (otherwise it wouldn’t cost anything). But yes you might need some tax increases – hence my suggestion of cutting the tax free income or basic deduction levels.

Re Curmudgeon’s take, I prefer a UBI to be called a “national dividend”. And yes ideally, a lot of it would be financed by green taxes, ulv taxes and resource rentals.

Consider your path at the point where you’ve cut existing benefits by $3000 and put in a $3000 UBI. That’s a budget cost of around $1 trillion a year for the US, but how is anyone qualitatively better off than before – existing beneficiaries have their position unchanged, and no one else has enough to live on.

But you don’t need enough to live on to be significantly better off. Someone who earned just barely enough to live on, and now has an income $3000 more than just barely enough to live on, is much better off.

I think it’s a roughly reasonable thesis that the distribution of income follows from the structure of production, and that if one wants to change the former, that would entail changes in the structure of production and the forms of social organization attending upon it. And not least because the linkage between production/labor and income, however ideologically illusory, means that those who would perhaps benefit most from changes in the distribution of income might well be those who would most oppose them. Given that we live in a world dominated by oligopolistic capitalism, the prime driver of which is the functional “imperative” to maintain the value of privately invested capital by means of the rate-of-profit and which is thus dependent on the contradictory realities of excess production and large economic rents, (complicated nowadays especially by the generalized corporate strategy of globalization and financialization, as flip sides of the same coin), it’s not just likely that the resulting distribution of income will reproduce itself together with its mode-of-production, but that the level and composition of consumption demand and thus of basic incomes will be constantly adapted to serve the re-production of that system.

IOW why assume a basic income level corresponding to the prevailing price levels imposed by current output and its arrangements? If the aim of a basic income policy is the de-commodification of labor, (or, more broadly, of many other attendant aspects of social life, such as household activity, child-rearing, education, health, political participation and cultural activity), then why assume that a threshold for a decent standard-of-living for all, in terms of quality-of-life and personal and collective freedom, is set by the current level of prices and output and to be secured simply by a redistribution of income. (Historically, capitalism has been fairly successful at inducing increases in productive efficiency, despite many at least partly self-induced crises, but efficiency is consumption is anethema to it and its “spirit”). By divorcing the distribution of income from the mode of its production, a reformist agenda not only renders it little likely that that a more just distribution could be achieved, but reproduces the “utility” of consumption as the prime justification of the system. (Even as rampant environmental and resource crises render expanded consumption increasingly doubtful to achieve: are 200 million automobiles for a nation of 300 million people really an efficient transportation system?) Rather shouldn’t the starting point for exploring the attainment of a more just and sustainable socio-economic order be an examination of alternative selection criteria for productive investment and technical development in place of the “private” property regime that currently prevails?

The main take-away from that old eponymous satirical epic was that capital is neither a hoard of gold, nor a set of machines, but rather an ensemble of social relations, whose modus operandi, however, is such as to generate the “socially necessary illusion” that a set of inter-related human activities must appear as a set of deterministic relations between things. What gets called “utopian” are those practical possibilities that such a system must perforce deny, exclude and repress.

What’s giving everyone in the USA $20k/yr free going to do to the price of rent?

To answer the question a bit obliquely, it’s hard to say something about the whole country. But in the midst of nearly 0% homelessness and supply already exceeding demand, if we can’t rely on capitalist market incentives to ensure landlords will maintain competitively low rates despite a universal national increase in income, that says more about the failure of market incentives to meet the population’s needs than it does about the failure of the universal income increase to meet the population’s needs. [This is one of those ‘if P, then Q’ type statements that’s actually intended as a ‘since P, Q’ type of statement. It’s kind of incredible how natural and automatic it is to convert the latter into the former. But that’s a different thread’s topic, nevermind.]

FWIW, when someone drags out the Econ 101 supply and demand charts to ‘prove’ rent prices will absorb a UBI with little benefit to the population, I think the proper response is to hear them out and then say, “Congratulations! You’ve made an excellent argument for the nationalization of housing property. In fact, you’ve completely convinced me! So, how would you like to proceed?”

John quiggen @ 38L

(The capital q on my keyboard doesn’t work).

I’m not at all making an assumption of a money-free or wage-less economy. I’m simply making the commonplace assumption that one person’s cost-price is another person’s income and that the price structure which in the main determines the distribution of income can’t simply be assumed to be an immutable given, (to be read off of N.I.P.A.)

“There is no such thing as a free lunch” is already a malignant slogan, because hungry, malnourished school children obviously don’t learn very well and the small cost is vastly outweighed by the benefit of such programs, but there is in fact a “free lunch” involved here, as many other commenters have variously mentioned or alluded to, viz. economic rents, (which is precisely what that right-wing slogan was meant to obfuscate), and how those feed into the cost structure and thus the interlinked distribution-of-income and cost-of-living. And analyzing how economic rents are woven into the structure of production and investment, (and correspondingly the demand for labor), while a very complex matter, is a key issue here. And altering the pattern of production and employment to reduce real costs-of-living rather than to augment private profits and expand consumption requirements, (with contradictory effects on labor demand, employment levels and wages), though a tall order, is not an impossible issue and equally worth of consideration.

Just to give a simple empirical example, the U.S. minimum wage peaked in 1968 at $10.31/hr. in current $, compared to $7.25 nowadays. But, though I can’t remember the exact percentages, since I heard it on the radio (NPR), the cost of rental housing then was a sharply lower % of income than it is nowadays. (I believe the median cost of housing services in the 1960’s was about 25% of median household income, compared to 40% nowadays. And as for “hedonic adjustments”, I did find a chart that had U.S. nationally indexed real housing prices rising between 1970 and 2011 by only 25%, as opposed to the Case Schiller index, which is only for existing, previously sold homes). (Health care and education costs are more notorious, but their egregious rises seem to be a specifically U.S. dysfunction).

Capitalism has always featured a precarious tension between its productive and its extractive aspects, but in the recent neo-liberal era, its extractive vs. productive balance has been increasingly working in reverse, resulting in increasing disinvestment and mal-investment, while shifting the distribution of socially produced surpluses increasingly toward capital and away from labor, which expresses itself both as declining wage incomes and increasing costs-of-living for the wage classes, (which I think has everything to do with globalization/financialization as the dominant strategy for maintaining oligopoly rents). Which is why I don’t think that talking in terms of fixed percentages of nominal price measures, however index-adjusted quite cuts the cake.

But the basic point is that the structure of production, (even if it occurs more on the level of “appearance” than “essence”), will largely determine the distribution of income .and so long as social recognitions, (since norms, being counter-factuals, can only be said to “exist”, if anchored at the level of (struggles for) recognition between persons), are tied to work as a contribution to social production, then changing the basis of those recognitions from “work” as disciplinary resentment and occupational status to fruitful activity will require changing the structuring of production and the political economy of power relations that result from it. Which again is why I don’t think that hypostatizing “a society somewhat like all those that have prevailed for the last century or two ” quite cuts the mustard,- (mixed metaphor alert!),- since that is ahistorical and seems to derive from the egodic assumption of neo-classical economics, and, as the advertizing disclaimer goes, “past performance is no guarantee of future success” with regard to the sustainability of current trends.

Policy proposals are not that hard to come up with. Taxes on wealth and economic rents, where persistently identifiable, would be a start. Downsizing the system of banking and finance, which has been a prime source for generating and channeling such rents would also be obvious. I would advocate for an “heroic” full employment macro fiscal policy, including government as employer of last resort programs, precisely in order break down the bifurcation of the work force into productive and unproductive segments, on which capitalism depends both functionally and ideologically, and thus to enable a reduction in required working hours and a fairer distribution and recognition of working burdens. And public investment, beyond the narrowly tailored non-rival public goods argument, and a publicly guided indicative industrial policy should be in the mix. And most of all, though the tallest task of all, a restoration of the full Keynes on Bretton Woods, including the ICE/Bancor proposal, as an FX and trade regime, would be required to restore the relative policy autonomy of governments over against the extra-territorial powers of the Wall St.MNC complex. But, of course, all that just amounts to wishful thinking, so long as the prevailing structure of production and the resulting political economy of power-relations remains in force. (Though it is true that “we” have accumulated much better economic policy knowledge, some of it of long standing, over the years. However, that that better policy knowledge is seemingly never applied, in favor of much worse, speaks to the point. Economics, as much as the capitalism it rationalizes, has been “working in reverse”).

In contrast to the prevailing doxa among the CT “collective”, I don’t put much stock in “normative political philosophy” and the elaboration of norms in abstraction from the functional grid from which they emerge and too which they respond, whether in rationalization or opposition to its constraints, (which, after all, is to abstract as well from the context of social relations to which they would apply). “Utopian” is means inherently infeasible, not because it’s somehow metaphysically impossible, but because it speaks to practical possibilities that are forcibly denied and excluded from the horizons of the prevailing order.

I hope the foregoing serves to clarify the differences in our respective POVs.

But how much of that change is the result of everyone wanting to live in New York? Housing prices and wages are both high in a small number of cities: Paris, London, New York, LA, etc. The concentration of economic activity may be a factor as well.

Right, right. But your preferences are atypical for a lot of people. I was talking to john c. about how preference changes might change prices. For instance, if more people want to spend more on bigger cars, then the average price of a car goes up, even if the affordability of the same car remains the same. A basic income policy probably wouldn’t change housing preferences. It might however make high-unemployment areas into stable communities financed mostly by transfers stimulating local economic activity. (Think small New England town financed by retirees, only more general).