The Conversation About Basic Income is a Mess. Here’s How to Make Sense of It.

Yves here. I know a universal basic income is a popular idea among readers, and I have to tell you, you are being set up.

Like it or not, even though we live in a fiat currency system, most people believe that their Federal taxes are necessary to fund Federal spending. We also live in a capitalist system, where most people have to work to earn income as a condition of their survival.

The big conservative argument for a universal basic income, and many neoliberals buy into it, is because it would be cheaper administratively and fairer than our patchwork of social safety nets. One of the benefits, for instance, is the benefits could be designed to taper off for those who had earned income, while many programs have sharp cutoffs that create disincentives against earning more than a certain level of income. Tech squillionaires are pushing the idea for their own selfish reasons: they think it will make more people willing to take the risk of starting a company (when 90% fail in three years in decent economic times) or donating their labor to one of their incubators.

Now why is this so bad? Consider that hatred of taxes and spending has been so successfully inculcated that there’s now widespread resentment of paying public teachers adequately (and let’s put aside the fact that the bigger problem with public schools is adminisphere bloat), when the experience of other countries suggests that higher levels of teacher pay are correlated with better academic performance. Degrading the status of teachers isn’t good for societal outcomes, yet most of the American public seems to have bought into that paradigm.

How does this relate to the universal basic income scheme? One of the reasons that social safety nets are still standing to a degree is that they have business support. Food stamps are good for Big Ag. Medicaid provides more income to the medical industrial complex. And they separately are targeted to recognized human needs. Even people who believe that the poor are really malingers are more willing to give their precious tax dollars to targeted spending than giving them a check that they stereotype will be used for drugs or gambling.

As we have discussed at greater length in the past, there was a large-scale universal basis income system in England, Speenhamland, which lasted for more than two generations. It was patchy since the level of benefits varied by locality, but the intent was to provide a bare-bones living. Even though it was initially popular, the result was first, that it did wind up serving as a subsidy to businesses, and second, it created an unskilled underclass. As Karl Polanyi wrote:

On the face of it the “right to live” should have stopped wage labor altogether. Standard wages should have gradually dropped to zero, thus putting the entire wage bill wholly on the parish, a procedure that would have made the absurdity of the arrangement manifest. But….[t]he majority of the countryfolk…preferred any kind of existence to the status of a pauper.

And the backlash was brutal. The 1834 Poor Law reform abolished the Speenhamland system. As Wikipedia explains: “The workhouses were to be made little more than prisons and families were normally separated upon entry.” “Outdoor relief,” which then meant aid to the poor without requiring that they enter an institution, was discouraged in the Poor Law Reform and then abolished in the 1840s. Polanyi again:

Never perhaps in all modern history has a more ruthless act of social reform been perpetrated; it crushed multitudes of lives while merely pretending to provide a criterion of genuine destitution in the workhouse test. Psychological torture was cooly advocated and smoothly put into place by mild philanthropist as a means of oiling the labor mill.

By Charlie Young has been active in numerous climate change campaigns and after working at the New Economics Foundation shifted his focus to working on and writing about new economics and systems theory. Originally posted at Evonomics

Universal Basic Income (UBI) is either absolutely bonkers pie-in-the-sky thinking or an ingenious idea whose time has come – depending on whom you ask. A litany of recent articles argue for and against the idea of giving every resident of a society or economy a guaranteed income stream, usually sufficient to live above the poverty line, regularly and into perpetuity. Those arguing for say that it offers a potential new awakening of cultural expression, as well as dismantling the disincentives to work associated with means-tested benefits, while supporting us through an age of automation, and also creating space for reimagining ownership of the commons. Those against say that there’s no such thing as free money, that people would simply stop working, that layabouts get enough as it is, and that it could lead to either the dismantling of capitalism or of the welfare state. Both sides of the argument – each including those from the political left and right – accuse the other of ‘not understanding economics.’ But the fact that people are arguing over whether or not UBI as a whole is a good idea means there’s something very wrong with the narrative. The debate we have today is rooted in a false dichotomy. It should be very difficult to be for or against something as broad and diverse as the ideas parceled up in UBI.

UBI is in fact not a single proposal. It’s a field of proposals that’s perhaps better thought of as a philosophical intervention, a new conception of macro-economic and political structure. It’s unusual to argue wholeheartedly against representative government, taxation or universal suffrage, while it is common to disagree on which party should govern, whether taxes should be raised or cut, and particular elements of voting procedure. In the same way, we shouldn’t argue all-out for or against UBI but instead inspect the make-up of each approach to it – that’s where we can find not only meaningful debate, but also possibilities for working out what we might actually want.

UBI has appeared to make some strange bedfellows; its supporters include anarchists, libertarians, liberal lefties and Republicans (including Richard Nixon). But on closer inspection it is clear that different groups are proposing fundamentally different things. UK think-tank Compass, for example, suggestsreplacing key elements of the current means-tested benefits system with a basic payment to all citizens, padded by slightly raising the top rate of tax. Economist Charles Murray, on the other hand, advocates paying all US citizens over the age of 21 a sum of $10,000 per year to serve as, in his words, ‘a replacement for the welfare state’. Then there is Dr Thomas Pogge, who suggests a global resources dividend (GRD) whereby current and historical injustices against the global poor are counteracted through the modest taxation of global natural resources – including fossil fuels, land used for farming, mining and destroyed habitats – and redistributing the levy amongst those involuntarily excluded from their use. All of these proposals (and dozens more) fall under the umbrella of UBI.

The most important distinguishing feature between the different iterations of UBI is where the funding comes from. Wrapped up in this are ancillary questions: what would a UBI replace, compensate for, or complement in the rest of the economy? What would the knock-on effects be for social welfare and the government’s responsibility to its citizens? Who gets the money is another question worth looking at (just how ‘universal’ is the income?), as is its amount and regularity. With these distinctions in mind and after reviewing relevant literature, I suggest an initial distilling of UBI into the following three categories:

A. Recalibrating existing tax and benefit systems

B. Replacing the Welfare State, aka ‘Voucherisation’

C. Communalising common assets

Recalibrating Existing Tax and Benefit Systems

According to advocates of [A], for UBI to be politically feasible it must be achieved using the existing infrastructure of taxation and spending. UBI is an immense ideological intervention – or so the argument goes – and as such should be funded without radical changes or additions to taxation but instead through restructuring the existing ‘inefficient’ and ‘unfair’ benefit systems.

Advocates tend to offer here what is referred to as a ‘no-frills’ UBI: subsistence or sub-subsistence levels of income to be supplemented by earnings from employment and/or disability, housing or child benefits.

Proposals found in [A] often set out to combat inequality and poverty, including through the dismantling of poverty traps such as the sudden removal of benefits as low-earners incomes rise (which can in some cases mean marginal deductions for the poor of 80%). They also often look to alleviate the pains of unemployment resulting from automation, which is projected to affect the poor most dramatically , as well as helping the projected expansion of the caring economy (especially important in ageing nations).

The savings from restructuring existing benefits are likely to be very large. Malcolm Torry of the Citizen’s Income Trust claims the administrative savings from dismantling the means-tested benefit system are in the range of £8-10bn. Put simply, it’s very expensive to decipher who is and isn’t deserving of government support, especially when recipients must prove their worthiness. Restructuring benefits to look more like a UBI could not only save money, proponents claim, but also be fairer.

Examples of these kinds of UBI proposals include the work of the RSA, a proposal in the recent manifesto of the UK Green Party, and the work of Philippe van Parijs of Oxford University, co-founder of the Basic Income European Network.

What they all have in common is a shared belief that a politically feasible UBI must be small-scale, sometimes include transitional proposals, and be based on funding from existing tax structures.

Replacing the Welfare State aka ‘Voucherisation’

Economists and political theorists on the right, especially those identifying as libertarian, see UBI as a vehicle through which to reduce government intervention in public and private life at large. From this perspective, a guaranteed UBI would legitimize the dismantling of other forms of welfare provision, as it levels the economic and social playing field. Similar to [A], proponents of [B] argue that means-tested welfare is seen as unnecessarily costly, ineffectual, and fundamentally unjust in that it is an economically and socially distorting form of state charity.

Prof. Matt Zwolinski of the Cato Institute enumerates four libertarian arguments for a UBI. He places them under the banners of: i) reduced bureaucracy, ii) reduced cost, iii) reduced rent-seeking (i.e. under a universal program there is less space for political exploitation or benefit fraud), and iv) a reduction in the state’s ‘invasive/paternalistic’ tendencies, as there is no longer a need to categorise beneficiaries as the deserving poor.

Examples include a proposal from one of the founding fathers of neoliberalism, Milton Friedman, a litany of publications from conservative think tanksincluding the Cato Institute, and the proposal of Charles Murray’s mentioned above.

One clear difference between the literature making up [A] and [B] is that the former focuses on macro-level indicators of say, inequality, and potential effects of redistribution on such indicators, while the latter focuses instead on changes in individual behaviour resulting from a UBI. The proposals that make up the [B] category put faith in individuals to, given more adequate means, make the world around them in a more effective way than the state can do on their behalf. The poor, in this view, are likely to make intelligent choices about how to spend cash grants, an argument backed up by empirical economic evidence from Uganda to Mexico. Thus, the two kinds of proposals differ in intention, assumed problem, and predicted outcome.

Communalising Common Assets

The communalising of common assets can be global natural resources, the carrying capacity of the biosphere, atmospheric carbon, fisheries and forests, unearned income, or even the productive capacity of automation and technological change. The fundamental assumption here is that such assets – be they physical, biological or cultural – should be respected as the common property of all, rather than be the source of exploitative disparities from unequal access and power. This set of proposals is more systemically transformative than [A] or [B] as it is predicated on the realisation of new economic institutions and drivers. This category is also more diverse in scope than either [A] or [B], differing not only in terms of funding source but also in geographical distribution – some propose a global UBI.

Peter Barnes and James Boyce outline this range of proposals as charges placed on the access and use of ‘communally inherited assets’ and the redistribution of the resulting revenue[3]. Charges could be placed, for example, on polluting the scarce resource that is the carrying capacity of our atmosphere, or on trades of stocks, bonds and derivatives (the latter of which could raise $300bn per year). Barnes and Boyce claim that charges on a ‘portfolio of universal assets’ could grant US citizens a UBI of $200 a month.

Iterations of wealth tax that could fund UBI include those suggested by Thomas Piketty like progressive capital taxation, and the Georgist land value tax (LVT) as proposed in the UK context by Martin Farley. Farley suggests land ownership be taxed and the raised revenue, coupled with that raised by what he calls Commons Licenses (a version of Barnes and Boyles’ common asset proposals), could fund a £4,500 annual UBI.

Economist Yannis Varoufakis and futurist Kartik Gada, on the other hand, have each suggested that the labour savings from automation could (and should) pay for UBI. Varoufakis’ proposal is one-part wealth tax and one-part ownership restructuring: a small tax is levied on shares from every initial public offering put into a Commons Capital Depository that in effect grants citizens property rights over new technologies that yield financial returns. The Commons Capital Depository would then pay out a UBI to all citizens. Varoufakis sees this as potentially alleviating “irreconcilable political blocs, while […] reinvigorating the notion of shared prosperity,” largely due to reframing understandings of when wealth is a result of hard work vs. context and luck especially in the face of technological unemployment.

Similar ideas have been touted by Silicon Valley entrepreneurs and tech-firms. Y Combinator has even launched its own UBI pilot programme (though this is arguably closer in essence to [A] than [C]).

While some proposals focus on addressing inequality and poverty traps [A], others focus on increasing individual freedoms and reducing government interference [B], and still others attempt to introduce new feedback loops into the economy and restructure the polity of ownership [C]. It is important to note that these are not necessarily mutually exclusive, given that the ideological foundations and value frames associated with each often overlap. However, the ontological differences are worth bearing in mind when speaking of UBI more generally.

Its time we treat UBI as the messy fabric that it is. Only by teasing apart the strands of the various arguments can we have a coherent discussion about whether and how best to implement its specific iterations. It’s especially important that we know what we’re looking at, especially given the recent upsurge in interest. Even if you consider yourself “pro” Universal Basic Income, a UBI by any other name may not smell as sweet.

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49 comments

  1. skippy

    All I need to know is how some of the original thinkers behind a UBI considered limiting voting rights because gosh…. then people would just vote themselves more money… as any other rational agent would…

    disheveled…. oops… that’s already in play and it seems the BSD say the table is full…. they earned it… thingy….

    1. Susan the other

      since the debt of dollars to others is backed by the full faith and credit of all taxable citizens, a UBI could be calibrated to things like various domestic inflation indexes (using UBI to serve as a counterbalance to higher prices? so they cancel each other out domestically and thereby strengthen the dollar guarantee) and also to some basket of social goods and services which make the dollar stronger in the same way ( which corporate America pretends is not even there). Imposing a tax on the exploitation of the environment to pay for UBI might be a bad idea because it is counterproductive (if the above are used) and incentivizes us all to exploit the planet so a tax on environmental exploitation, damage and etc should be given back to the earth itself to reclaim the damage done, etc. But that in turn could create very useful employment opportunities. In the end it is all 6s and that is what all the bean counters never acknowledge. Why not use all our tools?

  2. vlade

    Yves,
    I agree that the neolib arguments about guaranteed income are really shaky. But I can give you the same about job guarantee – because someone still has to decide WHAT jobs to create and WHO to offer WHICH jobs. And there’s precisely ZERO guarantee that this won’t get gamed by businesses (or government) to obtain slave labour.

    You’re giving Speenhamland as an example of badly implemented basic income. I can give you the ex-socialist block, from late 1940s to late 1980s (so two generations too!) of a badly run job-guarantees programme. It was a criminal offence not to have job at those times (classed as “social parasite”). And since it was gov’t that was allocating the jobs, it could, and did, use it as a lever to make life miserable for anyone and everyone who didn’t get in line.

    I can give you the example of Mincome, where results appear to be quite different from Speenhamland from what I can see..

    My point is that both BI and JG will be designed and run by humans. The question is, will the be also designed and run FOR humans? (as in for the majority, of course they will be designed and run for _some_ humans). Talking about BI or JG in general, in absence of very specific implementation plans, is, IMNSHO, nonsense.

      1. PlutoniumKun

        I’d agree with you that its insufficient to just focus on the (many) problems with a Universal Income, and brush off the huge potential issues involved in a jobs guarantee. Many moons ago I was involved in a work creation scheme aimed at encouraging the unemployed to do supported work schemes as a stepping stone to better jobs. On paper it seemed like a neat idea – do nice environmental work while helping people get into jobs, but in practice there were enormous obstacles involving unions, contractors, health and safety legislation, etc. Its just not as simple as saying ‘lets pay some unemployed to plant a woodland and make a park’. I’m not saying its impossible, but for me there are at least as many practical issues as with a Universal Guaranteed Income.

        I’d also agree that there are plenty of examples of successful models. Universal Child benefit, for example, is a form of universal income which has been a major success whereever it is tried, not least because when everyone gets it, everyone sees the value in keeping it.

        But the reality is that anyone who thinks there is a simple way of eliminating bureacracy and creating a sustainable and fair system is fooling themselves. Social welfare systems tend to be very complicated for the reason that life is complicated.

    1. funemployed

      Well, one way to ensure that it’s not slave labor is to offer a jobs guarantee to those who want jobs while providing food, clothing, shelter, medical care, to those who can’t or won’t work. We already throw out more than enough food and clothing to take care of the first two. Lots of empty rooms and buildings exist, but you have to be careful about segregation/concentration of poverty.

      There’s plenty of work to be done. Planting trees. Repairing roads and other infrastructure. Making Art. Caring for the elderly, children, the mentally ill, the physically disabled. The grunt work of basic research (which, in spite of what the credentialed class says, mostly requires little more than basic literacy and/or numeracy and the ability to punctiliously follow directions). Generally repairing our environment. Really, basically anything where the benefits are distributed to society as a whole instead of concentrated in the hands of the few.

      As for the who, a genuine democracy would reveal that most people actually want the socially beneficial work to be done, and would get more benefits than just the financial ones from doing it. Democratic decision making can happen at the community, state, federal, and (to a limited extent) global level simultaneously. Lenin destroyed any possibility for democratic decision-making regarding work, turning it into a spoils system, and leading to a very non-marxist alienation of labor. Central planning and corruption did the same thing under Mao. As for democracy + jobs guarantee. I can’t think of any historical examples in a large, economically advanced nation-state, but the halting steps FDR made in that direction were quite popular and did no small amount of good IMHO.

      Basically, I agree that any jobs guarantee run by an oligarchy is doomed, but I don’t think that’s what Yves is advocating for.

      1. funemployed

        didn’t to a great job making my main point, which is just that a very specific plan tends toward a central-planning mindset and creates rigidity, rather than the dynamic process of democratic decision making at multiple levels.

      2. Rodger Malcolm Mitchell

        There are two fundamental myths involved in the article:

        Myth #1. Federal taxes fund federal spending. The fact is that the federal government creates dollars, ad hoc, by spending, and never can run short of dollars. Even if all federal tax collections fell to $0, the government could continue spending, forever.

        Myth #2. There is a shortage of jobs. Since 1940, there never has been a shortage of jobs in America. Look in your local newspaper and you will see hundreds, perhaps thousands of jobs.

        Look on Internet jobs sites, and you will see thousands of jobs. What’s the problem? They are the wrong jobs in the wrong locations. Why would anyone think the federal government could provide the right jobs in the right locations?

        The jobs-guarantee “solution” is discussed at: The Jobs Guarantee.

        1. Godzilla

          BLS data shows there are not enough job openings. 1.4 unemployed for each opening I believe, even worse if you consider those dropped out of labor force or underemployed. can you point me to sources for claim that there are enough jobs, it’s just a skills/location mismatch?

          1. Vatch

            Godzilla, you are absolutely correct that there are not enough job openings. Here’s a Bureau of Labor Statistics chart showing that there is always more than one person per job opening:

            https://www.bls.gov/charts/job-openings-and-labor-turnover/unemp-per-job-opening.htm

            What this chart does not show is the number of discouraged people, who are neither working, nor actively searching for a job. So the number of truly unemployed people per job opening is really higher than the chart indicates.

        2. justanotherprogressive

          “Look in your local newspaper and you will see hundreds, perhaps thousands of jobs. ”
          I suggest you look a little closer at those “jobs”. Most are not jobs, but ads for private schools, like truck driving schools, IT schools, medical assistant schools, etc…..

          1. Cujo359

            … not to mention temp employment agencies and the like, who want to keep a stack of fresh resumes on hand just in case work actually turns up.

    2. Yves Smith Post author

      In the US we had a very successful model that was large scale and not oppressive during the Great Depression, the WPA. The fact that the model that the US would or could draw on worked well and created a lot of great public works and did things like hire artists would seem to be a major disproof of your foreign models. The US is exceptional, remember, so we never do things the way other countries have done them, as in draw on their models.

      1. David Barrera

        Not kidding! Can you conceive Varoufakis IPO taxation in the US? Taxing WS investment capital before capitalizes into profit and opens itself up to all loopholing and ill-crafted legislative taxation! Yup, hits the so-called redistribution at its core, slicing the cake before it can be fully shown or partially altered or hidden, just before even putting hands on the bare dough…I like the article selection. Behind the discourse of what works best rests one’s (individual,group,ideology) political best.

      2. Susan the other

        why don’t we get to the basics of the thing called “value” and base the strength of our currency on the strength of our society and environment and then it’s one big merry-go-round… everything short of this is like patching an old tire. now it’s a complete remodel.

      3. Darius

        Why not a policy of full employment with the spending policies needed to achieve it? This isn’t rocket science. We’ve done if before. Jobs and rising incomes are a pretty strong argument against resentment over helping “those people.” This is what I naively expected Obama and the Democrats to do. They’d still be in power if they did.

  3. Moneta

    I keep on wondering what would happen to tuition fees if students got 10k in ubi… would these just go up by the same amount?

    Implementing UBI would mean also implementing all kinds of caps.

    The reality is that no matter what system we choose, there will be those who make goods and services and those who don’t.

    The policies we choose will impact the goods and services that are produced. If those making these are penalized, they will become unproductive or revolt.

    And all the solutions proposed seem to revolve around squeezing the young who will be working!

    Yesterday, I read a post about a millennial concerned that his parents don’t have enough to retire. He can’t help because he has to pay for daycare. His question was what can he do?

    The solution is quite simple. The parents sell the house, move in with the kids, help pay rent and offer the daycare services.

    We could be building more duplexes instead of bungalows, townhouses and McMansions.

    For some reason, our society believes everyone should own their own home and be mortgaged to the hilt… or have “society” pay for their retirement. The problem is that most of “society” is stuck in the same predicament.

    We in the developed world have consumed more than our fair share of global resources and we will be forced to downsize our material lives. And the example above is one way it can happen.

    Then there could be a surplus of houses and the younger generation could actually purchase one at a reasonable price.

    1. vidimi

      I keep on wondering what would happen to tuition fees if students got 10k in ubi… would these just go up by the same amount?

      several years back, running for PM of Canada for the liberal party was michael ignatieff, a long-time university wonk and administrator. one of the policies he ran on was to give every high-school graduate a stipend of $6000 to use towards a post-secondary education.
      because the money was earmarked for that person, it was expected to increase demand which, i expected, the universities would absorb by raising prices. they would unlikely raise the full 6000 in the first year but, over a number of years, i would expect that number to be substantially higher.

      if that money isn’t earmarked, however, i don’t think it would have a material impact on tuition inflation.

  4. Moneta

    Instead of basic income, I can think of millions of jobs that could be created…

    Starting with research: anything increasing efficiency, cleaning up, reforesting, etc.

  5. HBE

    Advocating for UBI in a period of corporate dominance will end up being a fiat subsidy to Amazon and the like.

    After fully exploiting Labor to an extent they have no consumer base, Corps will either die (which they should) or become subsidized by govs through UBI, which is why so many squillionaires are clamoring for it.

    UBI while Corporations still rule, just turns them into undying monsters, that keep the oligarchy in control and the people out of power. All while continuing to ravage the world.

    UBI can be good, but UBI combined with corporate dominance is most certainly not.

    1. lyman alpha blob

      Excellent point. Any program that actually threatens corporate dominance will not be allowed. See: Sanders, Bernard.

  6. larry

    A good critique of the BIG is Bill Mitchell in a recent blog post, Why are CEOs now supporting basic income guarantees? found in billy blog.

    1. Murph

      Yes, and the whole series of related posts is fantastic. Some friends and I recently did a reading group for it and had great discussion.

      How come Mitchell isn’t mentioned more often around here?

  7. DJG

    Yves: Thanks for the headnote, which is more enlightening than the article itself. My take is that we have to go to some terribly retro solutions: Minimum wage at $15 or above, no exceptions to its application (not even to the ever-sniveling restaurant sector). Progressive taxation including as serious estate tax. Lifting of antiunion legislation at the federal and state levels (so-called right to work). And single-payer health insurance, which would minimize the endless premiums being forced on the populace. Oh, and a big raise in Social Security payments to give some of the disabled and some of the people over 60 a chance to make a decent decision about what kind of work to do.

    But it sounds as though a universal basic income would end up being more intrusive and less effective. After all, everyone would be eligible, but those with unusual circumstances (which is a lot of us) wouldn’t have access to other programs.

  8. Eureka Springs

    Excellent post topic and discussion. I would also love to know of discussions/posts out there discussing what to do once an HR 676 is passed… what to do with all those wayward bean counters out of a job.

    Random first thoughts.

    A couple generations is probably not long enough to learn how to shake off puritanical, neoliberal shackles. And if we allow the old company store to take a big/jig revenue stream for far far more than they are worth… like banks, credit cards, payday loansters, prison profiteers, cable and telcos and pharma, insurance, etc do today… then we are just plain stupid indeed.

    I hope Clive and the rest of us can perhaps shake off some of the verbiage which makes this post difficult and perhaps look to others rather than many of the old organizations which have failed us so many times. Friedman, Cato, etc. Yes, it’s important to watch them, but only as a warning…. In all other aspects they have anti-credibility. F them, seriously.

    For example they all still seem to think the poor just need to be brought barely above poor and be damned grateful about it. It’s like looking at public housing which looks like a prison and has no trees. That’s their legacy, to be kind about it.

    Also there is no mention of what happens with extreme wealth… as in there should never ever be any individual close to being a billionaire. Bring down that kind of wealth in a manner which improves basic standards for all. That too may be tricky but it’s a policy choice which should be part of the solution, imo. It’s one thing to hold property, it’s another to allow Ted Turner to own massive portions of entire States. Too allow half a dozen individuals to be worth more than the bottom half of a nation or corporations to hold the world hostage with derivatives… This must be addressed.

    Though not a perfect answer (what is?), I believe much of what work deemed needed should be decided by as many people as possible, democratically… including deeming things a mistake/unnecessary/ ooops, even detrimental.

  9. Felix FitzRoy

    A combination of modest BI and JG offers best results. While affordable or free child and elderly care are certainly desirable, as in the Nordic countries, some prefer to look after small children or elderly relatives at home, with substantial cost savings and potential welfare gains, and only a BI provides the means, and importantly independence for all providers of housework otherwise dependent on an earning partner, a dependence which generous JGs alone would not alleviate. Whatever the long term prospects of automation, there is no doubt that precarious or non-standard and self -employment are all rapidly increasing. A JG alone would be very problematic for short spells of un- or under-employment, while BI would also facilitate search for better jobs, allow choice of the optimal combination of pay and job-satisfaction, and put pressure on employers to provide it. A low minimum wage would actually offer employers more scope to increase job-satisfaction at the cost of productivity in response, yet with BI would not imply poverty. JG needed for single adults who cannot find work because modest BI would not be enough, whereas for families with children, BI for all would tide them over spells of unemployment, and JG would alleviate prolonged joblessness. Obviously health care and incapacity need additional funding in the US, though generally provided in Europe by existing welfare.

  10. MG

    This is important piece and there is a whole hodge-podge of very different ideas being included under UBI right now.

    Still favor using other methods (including an expanded EBIT) as well tackling the very regressive nature of certain taxes including SSI (flat payroll tax capped at a little over $105k annually) to try to address this issue in the interim although more widespread automation in another 10-15 years may make them a moot point.

    The only reason Murray proposes it is because he realizes that his solution is still considerably cheaper than current federal and state funding to address it and the stark reality of destitution.

    State security services know that even 5% of a population experiencing severe hunger/starvation in a densely populated urban area can lead to much higher crime and rioting. When that gets to 15-20%, revolution and wide scale rioting are very real possibilities.

    1. casino implosion

      My thoughts exactly. Huge masses of unemployed people with no income, on the Great Depression scale, will never be allowed to occur in the west again–too much political risk, easier to provide bread & circuses. We’ll see just enough subsidy of the poor to keep them this side of desperation, heads buried in pocket computers, while robot sentries patrol the gated communities just in case the relative poverty starts to rankle the proles.

  11. G3

    (1) The problem with UBI is public attitudes produced by painstaking indoctrination? Then the problem is the indoctrination, not the benefit.

    (2) Does the historical precedent of policy backlash mean that backlash is inevitable? [mmm, No.]

    (3) None of this militates against UBI as a complement to a job guarantee. That is its proper role. This is not XOR.

  12. David Green

    Fred Block and Margaret Sommers have attempted (2003) to counter the Speemhamland narrative:

    Abstract: In 1996, the U.S. Congress passed the Personal Responsibility and Work Opportunities
    Reconciliation Act that ended the entitlement of poor families to government
    assistance. The debate leading up to that transformation in welfare policy occurred
    in the shadow of Speenhamland—an episode in English Poor Law history. This article
    revisits the Speenhamland episode to unravel its tangled history. Drawing on
    four decades of recent scholarship, the authors show that Speenhamland policies
    could not have had the consequences that have been attributed to them. The article
    ends with an alternative narrative that seeks to explain how the Speenhamland story
    became so deeply entrenched.

    http://sociology.ucdavis.edu/people/fzblock/pdf/PAS252272.pdf

    1. Skip Intro

      Fascinating study, very long and empirical, for those who don’t care to read the whole thing, here are some conclusions (i.e. spoilers):

      In sum, the Speenhamland myth was created in the years of agricultural down- turn to divert blame for a deep agricultural crisis away from government policy and toward the rural poor who were the major victims of the economic downturn. Since the decision taken by the government on Ricardo’s advice to restore the pre- war parity of the pound intensified the rural depression, the mythology worked to cover up the first major policy failure of the new science of political economy. The importance of this myth becomes apparent in thinking about the diffusion of eco- nomic liberalism during the course of the nineteenth century. England’s ability to persuade other countries to adopt free trade, the gold standard, and the belief in market self-regulation depended on its ability to present itself as a great economic success story.138 Were other societies aware that the price that England had paid for economic liberalism was severe economic hardship in the countryside in the 1820s, 1830s, and 1840s, both the English model and its policy ideas would have been considerably tarnished. By shifting the blame for the problems on to Speenhamland and all its pernicious evils, the economic liberals successfully reframed the agricultural downturn into a problem of individual morality and an enduring parable of the dangers of government “interference” with the market.

      CONCLUSION
      The major lesson that we learn from this study is a renewed appreciation for the persuasive power of the metaphors of nature, natural laws, and the “science” of political economy to influence how history is experienced and why certain expla- nations for distress triumph over others. The critical point is that the Malthusian morality tale about the disastrous consequences of Poor Relief was produced before any evidence had been gathered and too early for the Speenhamland deci- sion to have produced its alleged consequences. In Malthus’s 1798 Essay on Pop- ulation, all the elements of the story line are already in place. Poor relief, by end- ing the scarcity that is endemic to nature in its untouched state, destroys both the incentive to work in order to eat as well as those to control childbirth and thus leads to a precipitous decline in productivity and a rapid growth of the pauper pop- ulations. The only way to return the poor to their natural state of self-discipline in both work and procreation is to abolish the system of poor relief and return to the natural state of scarcity and the human discipline it teaches.
      In subsequent years, as political economy gained the privileged status of a rec- ognized science, this story was repeated so frequently by political economists, the clergy, and various Parliamentary commissions that it gained the quality of truth. By the time the Royal Commission was created, a newly reformed parliament included a significant number of factory owners determined to create an available, cheap, and “free” labor force; the thesis was elevated to an absolute Scientific Truth based entirely on the laws of nature. Despite volumes of literature devoted to the subject, it took the next 130 years before there was a serious scholarly effort to show the shallowness and distortions of that document. But even after years of detailed scholarly work had effectively debunked the Speenhamland legend, con- temporary social welfare theorists were successful in mobilizing precisely the same story line to discredit current welfare institutions. Charles Murray’s influen- tial 1984 book, Losing Ground, simply updated the old story to argue that an excessively generous welfare system in the United States had undermined both the work ethic and sexual restraint among the poor.139 Moreover, the work of Murray and like-minded scholars played a critical role in creating the climate for the 1996 Personal Responsibility and Work Opportunity Reconciliation Act that eliminated the entitlement of poor children to government assistance.
      Our review of the historical evidence suggests two conclusions. First, the per- versity story lacks empirical support. The experience of the Speenhamland period is that poor relief did not hurt the poor; it helped to protect them from structural changes in the economy that had made it far more difficult for people to earn a liv- ing. Second, the doubts that have hung over guaranteed income proposals since Speenhamland lack historical foundation. While it is theoretically possible that a floor under incomes would be transformed into a ceiling, this certainly did not happen during the Speenhamland period, and there is little evidence that it has ever happened. In fact, there are good reasons this theoretical possibility is rarely likely to occur in practice. In contrast to Speenhamland, most contemporary income guarantee proposals, including variants on the negative income tax, do not require that recipients work. Hence, when employees are faced with an employer who is progressively lowering wages to take advantage of the income guarantee program, they are likely to quit and look for alternative employment since they know that they will be protected by the income guarantee from economic hardship during their period of unemployment. Moreover, under most circumstances, employers avoid unilateral reductions in wages precisely out of the fear that they would drive away existing employees and make it harder to fill vacancies. It seems only logical that if an income guarantee were in place, employers would become even more cautious about imposing wage cuts.
      Welfare and income maintenance policies need to be debated free of the mythologies that were created two hundred years ago. Above all, we need to move beyond the naturalized Malthusian accounts that see the behavior of the poor as always determined by their biological drives. Discarding the naturalizing blinders and examining the actual situation of the rural poor during the Speenhamland period, we are forced to recognize the central role of larger economic processes such as the severe agricultural deflation and the shift of industry to the North in explaining mounting rural poverty. Relief payments actually provided some pro- tection against these structural pressures. The contemporary lesson is obvious; it is time to reject the ideological claim that the best way to fight poverty is by imposing increasingly stringent conditions on ever shrinking transfer payments to poor households.

    2. Carole

      Thank you David Green for sharing the link to this body of research by Block & Somers & others (Blaug, Huzel, Snell, etc.) which explains the limitations of the Polanyi analysis.

      This provides a cautionary tale that great thinkers and writers are never correct about everything they write about. Their analysis is limited by the historical context, information available at the time of their writing, and their own biases.

  13. Kalen

    Thanks for another outstanding topic censored in MSM.

    However, more and more the UBI debate looks like throwing a fake bone among hungry dogs and make them to agreed how to divide it.

    I say we must feed the dogs first made them calm and contemplative and not driven by their own urgent calamities and their own hurt interest and/or their own acute pains needed to be urgently attended to.

    Yves is right stating that as far as bunch of ideas thrown and circulated by many as UBI is concerned it must be completely rejected in its however incoherent form since it reality does not solve any real social problem it pretends to solve, and in the most of proposed implementations would have been just another replacement subsidy for the oligarchic class such as SS, unemployment Ins., disability, medicare, Obamacare and all the state federal programs for poor or disabled or unemployed were all about and that include massive rent subsidies or rent control laws via IRS tax relief or credits.

    It is the capitalistic financial and debt based monetary system that is the fundamental problem, the system acting like a vacuum cleaner sucking up and concentrating all the people’s wealth in a form of money, banks printed in the first place from a thin air. And as a results create conditions for either private tyranny or state tyranny of powerful and wealthy.

    One must understand that what we face is not a policy problem but a fundamental philosophical, systemic problem of peoples self-governance.

    And the most important problem, the essential problem we have is a destructive power of money based economic system. In other words the step one to come up with any viable for 99% solution is eradication of money itself as an lifeblood of economic activity and replacing the currency of money with currency of labor, the very creative and/or repetitive labor we all are endowed at birth while not equally distributed we have a quite narrow range of capabilities of body and mind.

    Such a arrangement would eradicate extreme inequality or even any bigger inequality since without money, control or accumulation of labor power will be impossible in self-governed egalitarian society.

    In the first moment when we start discussing financing scheme of the welfare state we lost as we would loose trying to negotiate with our own tape warm instead of killing it as the real problem before any other problems.

    Here I found a interesting take on money from unique social and political perspective.
    https://contrarianopinion.wordpress.com/2015/04/14/plutus-and-the-myth-of-money/

    1. Grebo

      That link appears to be an entirely made-up pseudo-history. He understands neither what money is nor how it came to be. All the bits I read at random were nonsense. Spend your time on David Green’s link above instead.

  14. craazyman

    “Both sides of the argument – each including those from the political left and right – accuse the other of ‘not understanding economics”

    This is one of those rare situations where both sides of the argument are correct! You don’t see that happen a lot. hahahaha

    1. Disturbed Voter

      I understand creative accounting (economics) all to well. That is why I am not a Democrat nor a Republican.

  15. Katharine

    It seems to me that UBI rests on a fallacy of equitability: it’s the same for everybody so it must be fair. Clearly as long as people’s needs differ that will not be true. What people need is not access to income but access to shelter, food, healthcare and health-enhancing conditions, education, and meaningful activity that allows them to feel they are part of their community. (And meaningful is a loaded word. I don’t define your meanings or you mine.) Discussion of how to achieve all that may not be easy but could at least be useful in the long run, while discussion of how to reallocate resources without addressing basic needs cannot be.

  16. Disturbed Voter

    Every civilization relies on agricultural surplus. Simplify the argument to 19th century America. If you are an adult, in a farm family, and you are able to work, and you refuse to work … you don’t get fed. Pater Familias takes care of your anti-social behavior. Family members who can’t work, children and seniors and handicapped, are taken care of, because they can’t work, not because they deserve it just for being family members … and you don’t let family members starve while living with you. They might get anti-social. Everything that isn’t a con game, is basic survival (and hunting/gathering won’t support a large population). Anything past agriculture and other basics like housing and clothing and agricultural tools … is bonus.

    Cross of Gold speech by William Jennings Bryan … this will haunt the US until we run out of bonus. No manner of fancy finance will cause food to grow, if there aren’t farmers to plant it, seed to be planted, good land and good weather that can grow things. Invest in farm animals and scythes … you will need them.

    1. Mark P.

      That’s really a pretty strong case that the guy makes for JUDGE DREDD as prescient futurism.

      Thanks for the link.

  17. Grebo

    CH Douglas, one of the earliest proponents of UBI/BIG (he called it Social Credit), recognised that it would be inflationary. He therefore proposed freezing prices and compensating producers, which doesn’t seem like a good idea to me.

    I think the biggest problem with it would be that rents would simply rise to absorb it, leaving people (other than landlords) no better off. There would be a rush to become landlords, property prices would rise even further, the banks would make out like bandits again, and the whole crazy cycle we are already locked in would swing out even more.

    So, Bill Mitchell and Yves are right, it is another Neoliberal scam. The only way it could have the kind of outcome we would like is if it was part of a wholesale rejigging of the political economy; Land Value Tax, 100% reserve banking, MMT, the whole enchilada.

  18. nihil obstet

    Both the JG and the UBI (disclosure: I’m for the UBI) require significant social and economic frameworks ever to be more than failed utopian schemes. My sense is that the UBI is doing a better job of creating facts on the ground which will enable continued movement towards reasonable adoption: expanding Social Security, free college, paid family leave, paid annual leave — in effect, getting people’s buy-in to benefits that don’t track to an hourly paycheck. The JG advocates seem to be waiting for a big bang adoption, when I think they should be working to expand public employment (government payrolls have been shrinking) and improve rather than cut its benefits, raise the minimum wage, target employment projects rather than simply accepting that “training” will eventually solve unemployment problems. I may simply be unaware of their efforts to improve jobs tied to movement towards guaranteed jobs.

    The devil will always be in the details — do the easy stuff first as experiments in how to get to the goal.

    1. Grebo

      The Job Guarantee is envisaged as a backstop to mop up the stragglers after most unemployed have been hired due to a deficit fuelled recovery. It has some desirable economic side effects but it is an adjunct to getting the economy properly understood and steered back in a democratic direction.

      1. nihil obstet

        It’s envisaged as a backstop by some people (Warren Mosler comes to mind here). By others it’s envisaged as a robust alternative to private employment that will force the private employers to improve their wages and working conditions. And there are other visions of a Job Guarantee. As the BI has many justifications and potential forms so that we end up arguing at cross purposes, so does the Job Guarantee. I think the best way to winnow out what we want from a policy is to start experimenting with the policy.

  19. ChrisPacific

    The Speenhamland story suggests that it’s pointless to try and implement a basic income while most of the population still believes in a moral obligation to work. I suspect the reason that Speenhamland residents preferred to work was because they (correctly) figured there would be a reckoning down the road if they didn’t.

    On that basis, nothing can be done until the ideology of neoliberalism is defeated, or at least constrained within reasonable bounds. Problems do certainly exist that are solved efficiently and well by markets. It’s just that the domain of such problems is far smaller than neoliberals would have you believe.

  20. slorter

    As Kleiner writes:

    The conflict between the worker and the capitalist, or between the rich and the poor, can not be sidestepped simply by giving people money, if capitalists are allowed to continue to monopolize the supply of goods. Such a notion ignores the political struggle between the workers to maintain (or extend) the “basic income” and the capitalists to lower or eliminate it in order to strengthen their social position over the worker and to protect the power of “the sack.”

    Business leaders fight tooth and nail against any increase of social benefits for workers. Under their dominion, only one kind of UBI is possible: the one supported by Friedman and Murray … The UBI will be under constant attack, and unlike established social programs with planned outcomes that are socially entrenched and difficult to eliminate, UBI is just a number, one that can be reduced, eliminated, or simply allowed to fall behind inflation.

  21. GrkStav

    Is the point to provide a universal allotment of means of dignified subsistence to all, or a universal allotment of ‘tokens’ with which potentially to procure the means of dignified subsistence?

    Dignified means of subsistence include a wide variety of services. As services can neither be stored by their producers/deliverers nor saved by their recipients, they require ‘just-in-time” supply provisions.

    It is plain to me that certain categories of unstorable/un-savable means of dignified subsistence have to be de-commodified, in the sense that they have to be provisioned and accessed outside of the ‘circuit of capital’.

    A few things to think about regarding UBI and JG.

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