basic income

One could debate and dispute whether implementing a Basic Income Grant would be a good idea in affluent post-industrial societies, as we did (“here”:https://crookedtimber.org/2007/02/28/redesigning-distribution/ and “here”:https://crookedtimber.org/2007/07/10/should-feminists-support-basic-income/ and “here”:https://crookedtimber.org/2009/02/02/feminism-and-basic-income-revisited/) at CT before. Yet for developing societies with serious problems of persistent poverty, it seems to me like a very good idea indeed. One could add as a (desirable) condition that such a society should be able to internally generate the money to fund such a BIG (that is, there must be a big enough section of rich or middle class people whose consumption or income can be taxed). The idea may work wonderfully in countries like South Africa for example. If you give poor South Africans a relatively tiny BIG, they are not given welfare payouts that enable them to sit back and rest (as the critics may have it), but rather people are given some very basic means to take their lives in their own hands: money for food, for basic health care, for school fees, for a roof above their head, and perhaps to set up a small business. No more begging for food needed. The amounts can be tiny and may seem like pocketmoney to people in the global North, but as we know from the relative success of microcredits, poor people can change their lives (and those of their children) when they have small amounts of money.

There is now empirical evidence supporting this line of reasoning, coming from Namibia, where in 2004 “a coalition”:http://www.bignam.org/ of churches, trade unions, NGOs and AIDS organisations decided to run a pilot project to figure out what a small BIG would do to the lives of the extreme poor.

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We’ve had some discussions on the desirability of a basic income from a feminist perspective here before (“here”:https://crookedtimber.org/2007/02/28/redesigning-distribution/ and “here”:https://crookedtimber.org/2007/07/10/should-feminists-support-basic-income/). So I thought I would mention that about a month ago a special issue of “Basic Income Studies“:http://www.bepress.com/bis/ was published which addresses precisely the question “whether, all things considered, feminists should endorse a basic income.”:http://www.bepress.com/bis/vol3/iss3/ All authors answered this question with (relatively) affluent societies in mind; so the question still need to be answered for developing countries.

I guest-edited this issue and, as I wrote in “the introduction”:http://www.bepress.com/bis/vol3/iss3/art3/ (which also summarises the papers), apart from Barbara Bergmann’s contribution, I genuinely did not know what the other contributors (John Baker, Anca Gheaus, Jacqueline O’Reilly, Almaz Zelleke, and Julieta Elgarte) would argue. So although these authors are all either feminists or generally supportive of feminist views, I was truly surprised to find out that they strongly disagreed on the desirability of a basic income for feminists. On the one hand this is due to the different kinds of feminism which they endorse. Bergmann is a ‘Total Androgyny, Male Style’- type of feminist, whereas Baker and Zelleke, for example, are much more concerned about the short-term interests of carers and those who do not want to or cannot take on large paid jobs, which are often mothers and female carers. Yet the other source of disagreement is the predicted effects of a basic income on the gendered division of labour. Gheaus thinks it will become more unequal (a view I share based on an empirical literature survey of similar policy instruments or financial changes, which I did as a graduate student). Elgarte thinks we need to make policy space for an ‘avantgarde’ who is practicing a more egalitarian gender division of labour while at the same time protecting those who are living in more gendertraditional households, whereas Zelleke doesn’t think the gender division of labour will worsen if a basic income would be implemented.

How is all this possible? The answer, I think, lies in the fact that these papers argue at a high level of generality and without specifying what the level of the basic income will be and what other elements of the welfare state (public goods, merit goods, etc.) will be kept and/or implemented. Of course, this critique is not true for Bergmann, who has done some interesting calculations and argues that if we have a Swedish-style welfare state with targeted transfers and subsidized public and merit goods, there is no fiscal room left to increase taxation rates for a basic income; and it is also not entirely true for O’Reilly, who compares existing social policies aiming at gender equality, and concludes that she is sceptical about what a basic income can do better.

So my conclusion? “…the main merit of this debate in Basic Income Studies is that it provides evidence of the consolidation of the conflicting feminist views about basic income proposals when analysed at a general level. Therefore, I believe that it is time to move to a second stage of feminist analyses that needs to focus more on the details of the entire package deal of a basic income society, in an empirically grounded fashion.” (introduction, p. 5)

“Basic Income Studies”:http://www.bepress.com/bis/ is one of those wonderful Open Access Journals, so anybody interested can read it all “here”:http://www.bepress.com/bis/vol3/iss3/.

A little while ago, when “Harry discussed the latest addition to the Real Utopias Project on basic income and stakeholding”:https://crookedtimber.org/2007/02/28/redesigning-distribution/, some commentators raised the issue of the gender effects. I promised at that time that I would write a post about it. Well, finallly the time has come — thanks to a workshop on this topic that the “Heinrich Boell Foundation”:http://www.boell.de/ organised last Thursday in Berlin. They are the think-thank of the Green German Party, which is currently seriously debating whether they should advocate a basic income as (part of) a welfare state reform strategy. The workshop addressed the question whether a basic income would have different implications for women and men, and whether, all things considered, it would be a policy reform that feminists may want to support. [click to continue…]

The new issue of Prospect includes a rather meandering piece by Samuel Brittan on baby bonds, basic income and asset redistribution. A central issue in this area is how to finance such proposals, and that’s something Brittan gets down to at the end of his article. He canvasses Henry George-style proposals for land taxation and also mentions inheritance taxes, but finally comes up with a somewhat odd suggestion:

… a very simple practical proposal, why not auction planning permission? Many local authorities have approached this piecemeal by making such permission conditional on the provision of local services such as leisure centres, approach roads and so on. But why not return this windfall to the taxpayer in the form of asset distribution and let citizens decide how to spend it?

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That’s the title of my latest piece in The Guardian. There are two key points

First, in terms of effective tax rates and tax paid, any means-tested Guaranteed Minimum Income can be replicated by a non-tested Universal Basic Income, and vice versa

Second, for a number of reasons, it would be better to begin by expanding access to an adequate Basic income (in Australia, the Age Pension is an obvious benchmark) rather than starting with a small universal payment and then increasing it to a level sufficient to live on.

The last-but-one Italian Government, led by the 5 star movement’s leader Giuseppe Conte, introduced the reddito di cittadinanza (“citizens’ income”), the first form of universal social welfare scheme that Italy has ever had. In spite of its name, it is not a universal basic income of sorts, but a means-tested guaranteed minimum income which, when relevant/appropriate, is supposed to be conditional on willingness to retrain and accept proposed job offers. This model of welfare provision is, by European standards, nothing new or particularly impressive; yet the Italian welfare state never had a comprehensive system of this kind in place – the status quo before the reddito di cittadinanza was highly piece meal and unequal, with unemployment benefits restricted to certain categories; disability checks very intricately regulated; and no entitlements whatsoever based on sheer need alone.

Now, I am not exactly new to prejudices against welfare recipients, not only by the wealthy, but especially by those who are only ever so slightly better off – I live in the UK. Yet, in a country where the family represents, de facto, the welfare state for many people, and where many families are increasingly incapable of covering that role, I wasn’t prepared for just the level of hatred against the policy which, however anecdotally, I encountered over several conversations this Summer. [click to continue…]

From Monday we’ll be running an online symposium on Joseph Carens’s brilliant The Ethics of Immigration. (It is the book that sets a new standard for what “long-awaited” means.) So stay tuned. Meanwhile, I was speaking yesterday at a seminar organized by Democracy Forum at the House of Commons on “Immigration: Liability or Asset”. My talk, which shows the influence of Carens’s work in many respects, is below the fold.

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I was planning this as a followup to my earlier post on the feasibility of guaranteed minimum income (GMI) and universal basic income (UBI) policies[1]. Chris has opened debate on some of the fundamental issues associated with a Rawlsian transition, so there might be some benefits in a parallel discussion of the specifics of these policies, which seem to me to capture a fair bit of what Rawls had in mind.

Although the two kinds of policies can be made roughly equivalent in terms of their effects on the distribution of income net of taxes and transfers, they seem (to me, at any rate) to indicate quite different political approaches, and therefore different transition paths, each with their own difficulties.

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We were talking not long ago about universal basic income policy, and there were a variety of opinions about the desirability, political sustainability and implications of such a policy. But, before arguing about those issues, it’s useful to consider whether a basic income is feasible at all and, if so, what kinds of tax policies, and adjustments to other welfare policies, would be required to support it. I’ve considered the relatively easy case of a guaranteed minimum income, rather than a universal basic income paid to everyone, as advocated by Philippe von Parijs and others.

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The European Union’s political institutions are organising a many-months-long Conference on the Future of Europe. Part of this are a series of meetings of randomly invited European citizens, who are deliberating on what they think is important for the future of Europe. They are divided in several panels, and the panel that focusses, among other things, on social justice, is meeting this weekend for an online deliberation. As part of this, I have been invited to explain, in five minutes, the concept of ‘fairness’, and to do so in a balanced and accessible way. Not easy if one is used to give hourly lectures to university students, but here’s what I came up with – trying to get the most out of 5 minutes while also being as accessible as possible to a very diverse audience.

When thinking about fairness, we need to ask 4 questions:

First: what is fairness in general terms?
Second, where does fairness apply?
Third, what are the relevant principles of fairness?
Fourth, what are possible policies that affect fairness?

I will explain these four questions one after the other. [click to continue…]

[Warning: half-formed thoughts ahead]
One of the most striking characteristics of the 21st century economy (divided into goods, human contact services and information) is that even very poor people have access to information-based services that were almost unimaginable 30 years ago. Given free wifi and a second-hand phone, someone lining up at a food bank can blog about the experience, and possibly attract readers all around the world[1]. Or they can entertain themselves with an endless supply of free books, news media, music and videos. That’s great, but it doesn’t change the fact that people in both rich and poor countries are going hungry.

Economics has traditionally been about scarcity. But now we have one part of the economy where scarcity remains dominant, and another, growing part, where it has just about disappeared. That raises a lot of different issues.

First, while we are accustomed to think of things like economic growth and inflation rates as objective facts, they are actually based on index numbers, which are the products of theoretical models. Those models don’t work well when an increasing part of the economy consists of information services that are becoming radically cheaper all the time. As a result, much of the debate about the desirability or otherwise of growth is misconceived.

A positive implication is that we can anticipate improving standards of living, because of ever-increasing access to information services, without economic growth in the 20th century sense of steadily increasing throughput of materials and energy, and correspondingly increasing environmental damage. T

A negative implication is that real incomes (that is, incomes deflated by a consumer price index) can increase, even as basic needs like food and housing become less affordable, because the price of inforamation related services is falling fast. I can’t find much that’s readily accessible on this – pointers would be appreciated. One notable fact is that the proportion of disposable income spent on food, which fell sharply between 1960 and 1998, has remained almost static since then. The price of food seems to have risen a little faster than the CPI over this period.

I haven’t talked yet about human contact services. Scarcity is just as relevant here as in the goods economy. Governments are heavily involved in funding and providing these services, and the quality of services is hard to measure. As a result, the kinds of services people get aren’t determined simply by their capacity to pay.

A question to which I don’t have an answer. Is there some way to exploit the massively increased productivity of information services to allow more, and more equal, provision of basic goods? This question underlies a lot of discussion about Universal Basic Income and similar ideas, but is rarely posed in a satisfactory way, let alone answered.

As you can tell, I’m struggling with some complicated problems here, so any thoughts welcome.

fn1. In the early days of blogging, thehomelessguy [Kevin Barbieux] did exactly this. His most recent site is here.

Another in my series of extracts from my book-in-progress, Economic Consequences of the Pandemic. So far I’ve looked at luck the limited relationship between returns and social value and the fact that risk-taking is mostly done (involuntarily) by the poor, not the rich. Now I’m going to consider possibilities for reform
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Last year I published a book chapter arguing that the first step way to get to a Universal Basic Income in Australia was to expand the existing benefit system, increasing payments and removing conditionality (relevant extract over the fold).

This is often called a Guaranteed Minimum Income (GMI). I counterposed the GMI approach to the alternative of making a small payment to everyone in the community, and then trying to increase it over time. I suggested three initial steps

Assuming a ‘basic first’ approach is preferred, how might it be implemented? Three initial measures might be considered:

(i) increase unemployment benefits, at least to the poverty line;

(ii) replace the job search test for unemployment benefits with a ‘participation’ test;

(iii) fully integrate the tax and welfare systems

We are already on the way to taking these steps. Having floated the idea of a separate benefit for people who lose their jobs due to the virus crisis, the Australian government has quickly abandoned it in favour of an increase in existing benefits. This is supposed to be temporary, and, in theory, at least, there has been no change in compliance efforts like work testing. But ‘temporary’ will turn out to be a long time, and compliance efforts are going to be impossible until things return to normal.

The idea of a “Green New Deal” seems to be everywhere, quite suddenly, although Wikipedia suggests it has been around for quite a while and that the phrase was coined by the ubiquitous Tom Friedman. There’s quite a good summary of the various versions by David Roberts at Vox (for those who don’t know him, an excellent source on climate issues in general).

The fuzziness of the term is, in a sense, unsurprising. It seems obvious that any progressive policy for the US must fit this description in broad terms. That is, it must be a modernized version of the New Deal and it must imply a shift to an environmentally sustainable economy. So, I’m going to put up my own version, without claiming that it is the One True GND.

As far as the “Green” part is concerned, it’s urgently necessary to decarbonize the economy, shifting to a fully renewable electricity system and electrifying the transport system. The time when this could be achieved by a price-based policy (carbon tax or emissions permits alone) has passed. A carbon price is needed, but so is systematic regulatory intervention.

Compared to politics as usual, this is a big deal, involving trillions of dollars in investment a complete restructuring of the energy sector, and radical changes to transport systems. It also has the potential for substantial net gains in employment – solar energy already employs three times as many US workers as coal.

But relative to the US or world economy as a whole, a transformation of the energy and transport sectors is not a big enough deal to form the basis of a New Deal. Energy and transport together account for around 10 per cent of the economy, and replacing fossil fuels with renewable energy in this 10 per cent is not going to make a fundamental difference to the operation of capitalism.

Quite a few ideas involving more radical economic changes have been proposed, including a Job Guarantee and Universal Basic Income. I’ve argued for a combination of these. In the specific context of a Green New Deal, the most important demand should be a reduction in working hours, with no offsetting change in wages. That amounts to taking the benefits of increased productivity, and progressive redistribution, in the form of increased leisure rather than increased consumption. It goes along with research findings suggesting that experiences, rather than material goods, are a better source of lasting happiness. To make the argument work completely, we need the further proviso that experiences arising from participation in family and community activities are more genuine than those offered by commercial providers such as tourism operators. I’d be interested to know if there is evidence on this point.

I’m at an early stage on this, so I’ll stop here and leave it open for discussion.