COMMONOMICS
Growing Our Common Wealth™
Notes from "Basic Income: What, Why, How?"
by Commonomics Media Team on March 4th, 2016

On March 4, 2016, Commonomics USA's Policy Director, Matt Stannard, hosted a beginners' discussion on Basic Income. You can watch it on YouTube here

Here are the notes Matt used in the presentation, along with a few articles listed at the bottom for further reading (though not even close to a comprehensive list of articles). 


 



INTRODUCTION
 
The question of how communities produce and distribute material well-being is a deeply intimate question. Our economy is our shared materiality. It influences our personal relationships, our self-care, our social care.
 
There are tendencies in our economy that are in tension: On the one hand, we extract and exploit--from the earth and from each other. On the other hand, we cooperate. We're capable of acts and projects of collective greatness.
 
But too many of our laws favor the extraction and exploitation tendency over the cooperative.
 
The solutions to that imbalance are not necessarily "left" or "right" solutions. They do tend to be local solutions, but there are a couple of issues that need to be resolved at a larger level, and we believe the question of universal income is a national issue--if not a global issue. The reason, as a few of my esteemed colleagues at Commonomics USA have reminded me, is that implementing basic support in one community, or state, would likely cause regional imbalances and disruptive migration to places where support was available. Not always--but something as significant as the implementation of basic support income would surely have a significant effect on migration.
 
I think that while we can debate about what it looks like, how universal it should actually be, and where it comes from, I believe basic income is an important consideration because it would reflect an acknowledgement of our shared materiality.
 
For decades now, well-funded think tanks of individualism have been telling us we don't really share this planet, and that our fates are really not bound together materially. Of course, we disagree with that and we believe science, economics, philosophy and religion are all pushing us strongly in the opposite direction.
 
The disproportionate effect of global climate change and our invariably inequitable responses to it also raise questions of social support, and dividends, which of course is the key proposal of the Citizens' Climate Lobby. A carbon fee and dividend is a cousin of the basic income proposal. I think that synthesis is worth paying attention to, and I'd love for those movements to dialogue and converge.
 
I will inevitably leave some things out of this presentation. 
 
 
WHAT?
 
There is Unconditional Basic Income (or Universal Basic Income): All residents (under some proposals only citizens) receive an unconditional sum of money from public institutions.
 
There is Social Dividend: Everyone receives a regular payout from a profitable activity the government facilitates and/or benefits from. Alaska does this. A carbon fee and dividend system would do this.
 
There is Guaranteed Minimum Income: Means-tested regular financial support.
 
There is a Negative Income Tax: a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government.
                --Milton Friedman’s famous negative income tax. Under that proposal, people with no earned income would receive a refundable tax credit, or “negative tax,” sufficient to live on. As their income rose, the amount of the credit would fall by some set percentage of earned income. Once the credit fell to zero, they would start paying pay income tax on any additional earnings.
 
There are Dedicated Citizen Accounts, starting savings accounts when you're born and giving them to you when you reach legal age.
 
The argument for a basic income over a guaranteed minimum income is: The lack of means test or similar administration would allow for some saving on social welfare which could be put towards the grant.
 
In 2016 Switzerland will hold a referendum on a proposal to provide every citizen with an unconditional grant of 2,500 Swiss francs a month (about $2,800).
 

WHY?
 
Health of all kinds: The most sweeping, and often least discussed benefit is the value generated through improved individual, environmental, and community health. Poverty makes us sick, decreases productivity and creativity, makes us die sooner, etc. The other day I wrote something that resonated with a lot of people when I posted it. It was:
 
"If you're poor, you die earlier, live an exponentially more stressful life, spend more money on everyday necessities, often have untreated mental illness, are more likely to be abused by a partner, are less likely to be able to escape that abusive partner, face public service discrimination, lack access to cheap financial services, are forced to eat really unhealthy food rather than not eat at all, can't survive a $500 emergency, probably will die before you retire, are surrounded by toxins and pollutants, lack access to basic legal services and thus more likely to get hurt by courts, cops, landlords and bosses, and can't afford to engage in the very political process that makes it easier for all that horrible shit to happen to you."
 
The reversal of those facts wouldn't just be MORAL goods, but would also be material, economic, health, quality of life goods. It would make society more "competitive" in the good ways.
 
But this doesn't lead automatically to UBI. It may be possible to eliminate poverty without it. As we continue the discussion, listen for the ways in which the universality of basic income may or may not be necessary to solve the particular problems it purports to solve.
 
But also, listen for the ways in which the FAILURE to make basic income universal undermines its effectiveness--including in the area most often argued against public wealth distribution, which is incentives.
 
But the reason we need to include those health and Q of L indicators is that conventional economists tend to individualize the value of income distribution. The social benefits or deficits of income CAN be measured. All measurement is arbitrary and incomplete by nature, but nevertheless articulates something.
 
The Progressive, Social Democratic and Socialist Case:
I'm not going to spend a lot of time on this. Thomas Paine favored basic income--capital grants at the age of majority
Why? He had very solid philosophical reasons for doing so. They had to do with the social nature of wealth and the commons. He wrote:
"Poverty . . . is a thing created by that which is called civilized life. It exists not in the natural state. On the other hand, the natural state is without those advantages which flow from agriculture, arts, science and manufactures."
"It is a position not to be controverted that the earth, in its natural, cultivated state was, and ever would have continued to be, the common property of the human race."
 
Of course, many would rightly object to conceiving the commons of the earth as everyone's PROPERTY, and a better conception is to simply say that the commons is the source of all our "providence" or sustanance, and wealth, and that we are part of that system--the natural part of it, and the parts we build out of it. That reconception doesn't change Paine's point--it may even strengthen it.
 
Feminist economist Ailsa McKay argued for a basic income as "a tool for promoting gender-neutral social citizenship rights."
 
 
The Conservative Case:
As Noah Gordon pointed out two years ago, smart conservatives already favor efficiency and decentralization of benefits rather than their outright elimination, even if for some, the former is a stalking horse for the latter. But if we take them at their word, Noah Gordon says this:
 
"Florida Senator Marco Rubio’s plan would move most of America’s existing welfare funding into a single “flex-fund” to be disbursed to the states. Wisconsin Representative Paul Ryan, partly inspired by the “universal credit” reforms of Britain’s Conservative government, proposes allowing states to combine different forms of federal anti-poverty funding—food stamps, housing assistance, and more—into a single funding stream." 
"Friederich Hayek endorsed it. In 1962, the libertarian economist Milton Friedman advocated a minimum guaranteed income via a “negative income tax.” In 1967, Martin Luther King Jr. said, “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Richard Nixon unsuccessfully tried to pass a version of Friedman’s plan a few years later, and his Democratic opponent in the 1972 presidential election, George McGovern, also suggested a guaranteed annual income."
"in a 2006 book, conservative intellectual Charles Murray proposed eliminating all welfare transfer programs, including Social Security and Medicare, and substituting an annual $10,000 cash grant to everyone 21 years and older."
 
Of course such plans would decrease bureaucracy and the expense of means-testing, behavioral enforcement, etc.
 
As one comment on an article said: "For libertarians, it may be a wedge to hammer home a a more free and competitive market in the future."
 
 
The Case According to Technology:
In the Financial Times in February 2014, Martin Wolf has contemplated a guaranteed income’s ability to help society adjust to the disappearance of low-skill, low-wage jobs.
 
According to Nathan Schneider at Vice: "The idea of basic income has been appearing among the tech-bro elite a lot lately. Mega-investor and Netscape creator Marc Andreessen recently told New York magazine that he considers it "a very interesting idea," and Sam Altman of the boutique incubator Y Combinator calls its implementation an "obvious conclusion." Albert Wenger, a New York–based venture capitalist at Union Square Ventures, has been blogging about basic income since 2013. He's worried about the clever apps his company is funding, which do things like teach languages and hail cars, displacing jobs with every download.
"We are at the beginning of the time where machines will do a lot of the things humans have traditionally done," Wenger told me in October. "How do you avoid a massive bifurcation of society into those who have wealth and those who don't?"
 
 
The Case Against Work:
Our work norms are held up as natural, normal, the norm, heaven-sent, sensible, universal and ahistorical. We are expected to work. But as automation suggests, as the evolution of work hours and battles over work hours suggest, work is not a fixed and uncontested concept.
 
Given the coming impacts of climate change, the need to shift the way we operate major industrial and economic sectors, the possibility of a shift to local production, on top of automation, which can be scaled and localized as well, a 40 to 30 or even 20 hour work week is feasible.

This also interacts in interesting ways with the incentives debate. A materially EMPATHETIC approach to policy would probably re-frame incentives as a focal point of discussion. Saying that "aid decreases incentives" is not a morally neutral statement.
 
The extraction-and-exploitation economy will want to find ways to keep people working even beyond the social utility of it, of course, because that produces surplus value and profit.
Basic income serves as a normative and material check on that: It means people don't have to stay in work situations they don't want, and it sends a message that working is not a prerequisite virtue for moral consideration.
 
 
The "It's Better than the Status Quo" Case:
Existing support policies in the United States don't work. Ed Dolan, citing research from, among others, my buddy Elaine Maag, concludes:
"In short, the existing income support system of the United States seems to combine some of the worst features of the stylized alternatives that we illustrated earlier. They are not fully effective; despite their considerable cost, they leave some 16 percent of the population below the official poverty threshold. They are not tightly targeted. In an effort to maintain work incentives, many of them provide benefits to households well above the poverty level. Nonetheless, because of the additive nature of benefit reduction rates for multiple programs, many households, especially those just above and below the poverty level, face cliffs and high effective marginal tax rates that undermine incentives to work. Finally, the complexity of many programs, each run by its own bureaucracy, results in very high administrative expense."
 
 
WHY NOT?
 
Affordability: Ed Dolan estimates that "Providing a grant to each individual that was sufficient to bring a family of three above our assumed $20,000 poverty line would require payments or tax credits totaling roughly 10 percent of GDP."

But it would likely replace existing programs, and as we will discuss in a few minutes, it could be facilitated through quantitative easing or other monetary policy that would be creative rather than redistributive. Also, there are some tax-based ways of providing it.
 
Incentives: People need the threat of economic insecurity to work hard (because that's the only logical form of the incentives argument at this level--people will still be rewarded for harder work)

But Ed Dolan writes:
"[Basic Income] would provide substantial work incentives. Because there is no reduction of benefits as earned income rises, it would avoid the problems of cliffs and high effective marginal tax rates for low-income households and second earners. (For readers familiar with the economic terms, a UBI would have an “income effect” on labor supply but no “substitution effect,” unlike current income support programs, which typically have both.)"
 
Redistribution is immoral or undesirable
 
No political will: But that is changing
 
Inflation: Not really how inflation works, and pulling people away from the kind of economic insecurity that makes them not spend any money will not be inflationary--or at least not hyperinflationary. I would refer everyone to Ellen Brown on these questions, and to the debate that's occurring over in Britain as the impending future Labour government of Jeremy Corbyn considers "quantitative easing for the people."
 
Remember, finally, that most of the arguments against UBI are arguments against most other types of support.
 
 
 HOW?
 
Taxation: Limited by political will, but is the basis for experiments in various countries.
 
Land Value Tax: Potentially huge. The key is the political plan to get there, which may or may not encounter a special quality of resistance from the elites, since the Georgists are right about the way land ownership locks value and growth into the hands of very few.
 
Democratization of money: use of the creation process of money and value in the service of basic income distribution
 
Community Implementation: I said at the beginning of this discussion that many people argue basic income must be universal because of migration. There are nevertheless many reasons to believe that in INTENTIONAL COMMUNITIES, some of which already share income, a basic income schema could be developed, and because intentional communities have the right to approve membership, migration might not be a problem, or integration could be managed. An intentional community could "quantitatively ease" its members through its internal currency, although it would need to do so judiciously. An intentional community could make people pay in and distribute out. An intentional community could implement a "basic material shares" program that was goods-and-services rather than income based, even utilizing time banking and other barter systems that could really only work locally. If you are interested in that conversation, we'd want to schedule something new, with my colleagues Ma'ikwe and Chong Kee involved as well.
 
Further Reading:

A Brief History of Basic Income Ideas, on the basicincome-europe.org web site

Ed Dolan's three part series in 2014 at EconoMonitor, his blog

Nathan Schneider's Why the Tech Elite Is Getting Behind Universal Basic Income at Vice just over a year ago

Noah Gordon, The Conservative Case for Basic Income in the Atlantic in 2014
 



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