Basic income

This article is about a system of unconditional income to every citizen. For the more specific form financed on the returns of publicly owned enterprises, see social dividend. For social welfare based on means tests, see Guaranteed minimum income.
Not to be confused with minimum wage or living wage.
On 4 October 2013 Swiss activists from Generation Grundeinkommen organised a performance in Bern where 8 million coins were dumped on a public square, as a celebration of the successful collection of more than 125,000 signatures, which will force the government to hold a referendum on whether or not to incorporate the concept of basic income in the Federal constitution.

An unconditional basic income (also called basic income, basic income guarantee, universal basic income, universal demogrant,[1] or citizen’s income) is a form of social security system[2] in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.

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

Basic income systems that are financed by the profits of publicly owned enterprises (often called social dividend or citizen's dividend) are major components in many proposed models of market socialism.[3] Basic income schemes have also been promoted within the context of capitalist systems, where they would be financed through various forms of taxation.[4]

Similar proposals for "capital grants provided at the age of majority" date to Thomas Paine's Agrarian Justice of 1795, there paired with asset-based egalitarianism. The phrase "social dividend" was commonly used as a synonym for basic income in the English-speaking world before 1986, after which the phrase "basic income" gained widespread currency.[5] Prominent advocates of the concept include Philippe Van Parijs, Ailsa McKay,[6] André Gorz, Hillel Steiner, Peter Vallentyne, and Guy Standing.

Topics in relation to basic income

Administrative efficiency

The lack of means test or similar administration would allow for some saving on social welfare which could be put towards the grant.

The Basic Income Earth Network (BIEN) describes one of the benefits of a basic income as having a lower overall cost than that of the current means-tested social welfare benefits,[7] and they have put forth proposals for implementation they claim to be financially viable.[8]

Work incentives and disincentives

A frequent objection to basic income is that it would create a disincentive to work since the availability of the income is unconditional.[9][10][11] It might be expected that the magnitude of such a disincentive would depend on how generous the basic income were to be. Some campaigners in Switzerland have suggested a level that would only just be liveable, arguing that people would want to supplement it.[12]

Tim Worstall, a writer and blogger, has argued that traditional welfare schemes create a disincentive to work because such schemes typically cause people to lose benefits at around the same rate that their income rises (a form of poverty trap where the marginal tax rate is 100%). He has asserted that this particular disincentive is not a property shared by basic income as the rate of increase is positive at all incomes.[13]

In one study, even when the benefits are not permanent, the hours worked—by the recipients of the benefit—are observed to decline by 5%, a decrease of 2 hours in a typical 40 hour work week:

While experiments have been conducted in the United States and Canada, those participating knew that their benefits were not permanent and, consequently, they were not likely to change their behaviour as much or in the same manner had the GAI been ongoing. As a result, total hours worked fell by about five percent on average. The work reduction was largest for second earners in two-earner households and weakest for the main earner. Further, the negative work effect was higher the more generous the benefit level.[10]

However, in studies of the Mincome experiment in rural Dauphin, Manitoba in the 1970s, the only two groups who worked significantly less were new mothers and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling.[14] Under Mincome, "the reduction of work effort was modest: about one per cent for men, three per cent for wives, and five per cent for unmarried women."[15]

Another study that contradicted such decline in work incentive was a pilot project implemented in 2008 and 2009 in the Namibian village of Omitara; the assessment of the project after its conclusion found that economic activity actually increased, particularly through the launch of small businesses, and reinforcement of the local market by increasing households' buying power.[16] However the residents of Omitara were described as suffering "dehumanising levels of poverty" before the introduction of the pilot,[17] and as such the project's relevance to potential implementations in developed economies is not known.

Funding

When Milton Friedman and other economists proposed negative income tax in the 1960s, the idea was that it could be financed by a flat tax, reduced bureaucracy and that the income guarantee would slowly be phased out. The idea was to have a simpler welfare system and to make it easier for unemployed people to get into the workforce. Since the main advocacy for the reform has come from other political camps than the right wing, such as the Greens, but also some socialists, feminists and most recently the Pirates. People from different ideological backgrounds have over the years proposed different models, including both different financing and different levels. Socialists and other people who believe in the idea of common resource ownership have proposed funding on the basis of social ownership of the means of production and/or natural resources. People to the right, such as Friedman, are usually inclined to finance only by flat tax, or a flat tax and some other traditional taxes. Greens are keen on "green financing", whether it be environmental taxes or in some other ways. Also worth mentioning is the idea to finance mainly or partly with VAT and the idea to have a monetary reform at the same time, which supposedly can take a big part of the funding.

Affordability

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

Specific, though informal, measurements were made by Pascal J. for Canada who concluded that a 2004 taxable basic income benefit of $7800 per adult could be afforded without any tax increases by replacing welfare, unemployment, and core old-age services.

A 2012 affordability study done in the Republic of Ireland by Social Justice Ireland found that basic income would be affordable with a 45% income tax rate. This would lead to an improvement in income for the majority of the population.[18]

Difference from guaranteed income

Basic income and traditional welfare systems both share goals of achieving some level of economic equity. Guaranteed income puts preconditions on the payment of income.

Potential Source for Funding

3 Columns in this section, new column continued right

Taxation

money printing

Only suitable on Fiat money

Profiting by common ownership and collecting money

Integration of social welfare

  • Integration of current social welfare, include income support, unemployment support, subsides, pensions and etc.
  • reduced bureaucracy, reduce cost of personnel and raise effective, it is cost and waste by means test and eligibility checking for a welfare, including documents, offices, air-conditional and other consumption.
  • Reduce and eliminate concession and subsides, for a few of peoples and legal entity only, replace for this, issuing for whole citizens instead.
  • Elimination of current income support programs and tax deductions.
  • Repayment of the grant at death or retirement.

Pilot programmes

Main article: Basic income pilots

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

Basic income and ideology

Left-wing views

Socialist and left-wing economists and sociologists have advocated a form of basic income as a means for distributing the economic profits of publicly owned enterprises to benefit the entire population (also referred to as a social dividend), where the basic income payment represents the return to each citizen on the capital owned by society. These systems would be directly financed out of returns on publicly owned assets and are featured as major components of many models of market socialism.[3] Erik Olin Wright, for example, characterizes basic income as a project for reforming capitalism into a socialist system by empowering labor in relation to capital, granting labor greater bargaining power with employers in labor markets, which can gradually de-commodify labor by decoupling work from income. This would allow for an expansion in scope of the "social economy", by granting citizens greater means to pursue activities (such as the pursuit of the arts) that do not yield strong financial returns.[24] Other theorists leaning towards different kinds of socialism who have advocated basic income include James Meade, Bertrand Russel, Frances Fox Piven and Harry Shutt. Meade states that a return to full employment can only be achieved if, among other things, workers offer their services at a low enough price that the required wage for unskilled labour would be too low to generate a socially desirable distribution of income. He therefore concludes that a citizen's income is necessary to achieve full employment without suffering stagnant or negative growth in wages.[25] James Meade advocated for a social dividend scheme to be funded by publicly owned productive assets.[26] Russel argued for a basic income alongside public ownership as a means to decrease the average length of the working day and to achieve full employment.[27] Fox Piven holds the view that an income guarantee would benefit all workers by liberating them from the anxiety that results from the "tyranny of wage slavery" and provide opportunities for people to pursue different occupations and develop untapped potentials for creativity.[28] Gorz saw basic income as a necessary adaptation to the increasing automation of work, but also a way to overcome the alienation in work and life and to increase the amount of leisure time available to each individual.[29] Harry Shutt proposed basic income along with reforms to make all or most of the enterprises collective in nature, rather than private. Together, he argued, these measures would constitute the make-up of a post-capitalist economic system.[30]

Georgist views

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

Right-wing views

Support for basic income has been expressed by several people associated with right-wing political views. While adherents of such views generally favor minimization or abolition of the public provision of welfare services, some have cited basic income as a viable strategy to reduce the amount of bureaucratic administration that is prevalent in many contemporary welfare systems. Others have contended that it could also act as a form of compensation for fiat currency inflation.[31][32][33]

Feminist view

Feminist economist Ailsa McKay argued for a basic income as "a tool for promoting gender-neutral social citizenship rights."[6]

Technological unemployment

Concerns about automation and other causes of technological unemployment have caused many in the high-tech industry to turn to basic income proposals as a necessary implication of their business models. Journalist Nathan Schneider first highlighted the turn of the "tech elite" to these ideas with an article in Vice magazine, which cited figures such as Marc Andreessen, Sam Altman, Peter Diamandis, and others.[34]

Worldwide

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

Advocates

Europe

European advocates of basic income system are for example Philippe van Parijs,[35] Ailsa McKay (until 2004),[36] Götz Werner, Saar Boerlage,[37] André Gorz,[38] Antonio Negri,[39] Osmo Soininvaara,[40] Guy Standing.[41][42]

Some individuals who support introduction of basic income in Germany include activist Susanne Wiest, Green politician Sabine Niels, CDU politician Dieter Althaus, businessman Götz Werner, CDU politician Thoma Dörflinger,[43] leader of the Left Party Katja Kipping.

North and South America

Advocates of basic income from North and South America include Charles Murray,[44] Eduardo Suplicy[45] and Hugh Segal, Canada.

The Permanent Fund Dividend paid to residents of Alaska (subject to certain conditions or requirements) is considered to be a leading example of a Basic Income policy.[46]

Asia, Africa and Oceania

Advocates from Oceania include Gareth Morgan.[47]

See also

References

  1. ↑ "Improving Social Security in Canada Guaranteed Annual Income: A Supplementary Paper". Government of Canada. 1994. Retrieved 30 November 2013.
  2. ↑ "History of Basic Income". Basic Income Earth Network (BIEN).
  3. 1 2 Social Dividend versus Basic Income Guarantee in Market Socialism, by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004.
  4. ↑ Is Socialism Dead? A Comment on Market Socialism and Basic Income Capitalism, by Arneson, Richard J. 1992. Ethics, vol. 102, no. 3, pp 485-511. April 1992.
  5. ↑ Who framed 'social dividend'?, by Van Tier, Walter. March 2002. USBIG Conference, CUNY.
  6. 1 2 McKay, Ailsa (2001). "Rethinking Work and Income Maintenance Policy: Promoting Gender Equality Through a Citizens' Basic Income". Feminist Economics 7 (1): 97–118. doi:10.1080/13545700010022721.
  7. ↑ "BIEN: frequently asked questions". Université catholique de Louvain. Retrieved 24 July 2013.
  8. ↑ "Basic Income Studies: Papers and Resources". Basic Income Earth Network. Retrieved 24 July 2013.
  9. ↑ "urn:nbn:se:su:diva-7385: Just Distribution : Rawlsian Liberalism and the Politics of Basic Income". Diva-portal.org. Retrieved 16 February 2014.
  10. 1 2 Gilles Séguin. "''Improving Social Security in Canada – Guaranteed Annual Income: A Supplementary Paper'', Government of Canada, 1994". Canadiansocialresearch.net. Retrieved 16 August 2013.
  11. ↑ The Need for Basic Income: An Interview with Philippe Van Parijs, Imprints, Vol. 1, No. 3 (March 1997). The interview was conducted by Christopher Bertram.
  12. ↑ Wolf Chiappella. "Tim Harford — Article — A universal income is not such a silly idea". Tim Harford.
  13. ↑ Worstall, Tim (12 July 2013). "Forbes article". Forbes.
  14. ↑ Belik, Vivian (5 September 2011). "A Town Without Poverty? Canada's only experiment in guaranteed income finally gets reckoning". Dominionpaper.ca. Retrieved 16 August 2013.
  15. ↑ A guaranteed annual income: From Mincome to the millennium (PDF) Derek Hum and Wayne Simpson
  16. ↑ "Basic Income Grant Coalition: Pilot Project". BIG Coalition Namibia. Retrieved 24 July 2013.
  17. ↑ Otjivero residents to get bridging allowance as BIG pilot ends
  18. ↑ "Basic Income - Why and how in difficult economic times : Financing a BI in Ireland" (PDF). Social Justice Ireland. 14 September 2012.
  19. ↑ A Future for Socialism, by Roemer, John. 1994. Harvard University Press: "Stock prices are quoted not in currency but in coupons, issued to citizens on attaining their majority, not convertible to cash, and reverting to the treasury at death."
  20. ↑ On the Economic Theory of Socialism, by Lange, Oskar. 1936. The Review of Economic Studies, Vol. 4, No. 1: "It seems, therefore, convenient to regard the income of consumers as being composed of two parts: one part being the receipts for the labour services performed and the other part being a social dividend constituting the individual's share in the income derived from the capital and the natural resources owned by society."
  21. ↑ http://www.basicincome.org/news/2012/06/brazil-basic-income-in-quatinga-velho-celebrates-3-years-of-operation/
  22. ↑ https://www.givedirectly.org/research-at-give-directly.html
  23. ↑ http://www.washingtonpost.com/news/wonkblog/wp/2015/10/08/the-remarkable-ways-a-little-money-can-change-a-childs-personality-for-life/
  24. ↑ Wright, Erik Olin. "Basic Income as a Socialist Project," paper presented at the annual US-BIG Congress, 4–6 March 2005 (University of Wisconsin, March 2005).
  25. ↑ Meade, James Edward. Full Employment Regained?, Cambridge University Press, 1995, ISBN 0-521-55697-X
  26. ↑ "Basic Income". Media Hell. Retrieved 9 December 2012.
  27. ↑ Russell, Bertrand. Roads to Freedom. Socialism, Anarchism and Syndicalism, London: Unwin Books (1918), pp. 80-81 and 127
  28. ↑ Frances Goldin, Debby Smith, Michael Smith (2014). Imagine: Living in a Socialist USA. Harper Perennial. ISBN 0062305573 p. 132.
  29. ↑ André Gorz, Pour un revenu inconditionnel suffisant, published in TRANSVERSALES/SCIENCE-CULTURE (n° 3, 3e trimestre 2002) (French)
  30. ↑ Shutt, Harry (15 March 2010). Beyond the Profits System: Possibilities for the Post-Capitalist Era. Zed Books. p. 124. ISBN 978-1848134171. a flat rate payment as of right to all resident citizens over the school leaving age, irrespective of means of employment status...it would in principle replace all existing social-security entitlements with the exception of child benefits.
  31. ↑ Dolan, Ed (27 January 2014). "A Universal Basic Income: Conservative, Progressive, and Libertarian Perspectives". EconoMonitor. Retrieved 29 September 2014.
  32. ↑ Weisenthal, Joe (13 May 2013). "There's A Way To Give Everyone In America An Income That Conservatives And Liberals Can Both Love". Business Insider. Retrieved 29 September 2014.
  33. ↑ Gordon, Noah (6 August 2014). "The Conservative Case for a Guaranteed Basic Income". The Atlantic. Retrieved 29 September 2014.
  34. ↑ Schneider, Nathan (6 January 2015). "Why the Tech Elite Is Getting Behind Universal Basic Income". Vice.
  35. ↑ Van Parijs, Philippe (ed.). "Arguing for Basic Income: Ethical Foundations for a Radical Reform", London: Verso, 1992
  36. ↑ Ailsa McKay, "Why a citizens' basic income? A question of gender equality or gender bias", Work Employment & Society, June 2007, vol. 21 no. 2, pp. 337–348
  37. ↑ (Dutch) Saar Boerlage: "Het basisinkomen stimuleert op een positieve manier de inzet van het individu in de samenleving" (Basic income stimulates in a positive way the input of the individual into the society), interview, Vereniging Basisinkomen: Nieuwsbrief Basisinkomen 48 (April 2007).
  38. ↑ "Critique of Economic Reason", André Gorz, in: Peter Waterman, Ronaldo Munck, "Labour Worldwide in the Era of Globalisation: Alternative Union Models in the New World Order", Macmillan, London, 1999
  39. ↑ Empire PDF Michael Hardt – Italian Marxist sociologist Antonio Negri, "Empire", Harvard University Press, 2000
  40. ↑ Osmo Soininvaara, "Hyvinvointivaltion eloonjäämisoppi" (A survival doctrine for the welfare state), Juva, WSOY, 1994, 298 p, ISBN 951-0-20100-6
  41. ↑ Guy Standing and Michael Samson (eds.), "A Basic Income Grant for South Africa", University of Cape Town Press, Cape Town, 2003
  42. ↑ Standing, Guy (ed.). "Promoting Income Security as a Right: Europe and North America", Anthem Press, London, 2005
  43. ↑ A Basic Income for Rural Areas?
  44. ↑ "Book review: In our hands: A plan to replace the welfare state by Charles Murray" (PDF). Conallboyle.com. February 2007. Retrieved 24 July 2013.
  45. ↑ "Citizen's Basic Income: The Answer is Blowing in Wind" DOC, Eduardo Matarazzo Suplicy, USBIG 5th Congress, 2006
  46. ↑ "Alaska's Citizens' Dividend Set To Be Near Highest Ever". BIEN. Retrieved 3 November 2015.
  47. ↑ "Turning tax and welfare in New Zealand on its head". Big Kahuna. 2011. Retrieved 24 July 2013.

Further reading

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