Friday, June 17, 2016

Guaranteed Income, an Idea with Plenty of Merit, Returns to the News

There are few comprehensive possible solutions to the permanent jobs crisis caused mostly by automation, globalization, efficiency, and the exclusively one-way movement of these trends.  Three of the only four I have seen that could remove the problem completely are reduced working hours, assured government jobs, and a system of payments for providing electronic content.  The fourth is a guaranteed citizen’s income.

I wrote favorably about such a thing in a November 2014 post, and analyzed it in detail in Work’s New Age Chapter 8, so I will be brief about introducing it.  It has a long, honorable place in American political thought, with advocates on both the left (Bertrand Russell and John Kenneth Galbraith) and the right (Thomas Paine and Milton Friedman), since it offers not only the ultimate in social security but a minimum of government involvement.  Similar programs, from Alaska’s annual dividend to the national Earned Income Credit, have succeeded.  Its conceptual appeal rests on two facts:  that functioning markets not only require sellers but buyers, who must have money from somewhere; and that, although we have replaced jobs in extraction areas such as farming, fishing and mining with manufacturing ones, and in turn exchanged those for ones in services, we know of no paying employment that will replace endangered and disappearing jobs there.  To qualify as guaranteed income, as opposed to welfare, federal governments must provide money to all adult citizens, regardless of how much they earn from other sources.  Its largest obstacle is, of course, its cost.

After years of only occasional mention, guaranteed income – also called a “basic income” – has made the pages of The New York Times, The Economist, Financial Times, and elsewhere.  The impetus was probably Switzerland’s June 5 referendum, in which automatic monthly payments of SFR2500 and SFR625 in their currency almost at par with the U.S. dollar would have been made to each citizen adult and citizen child respectively.  Only 23% voted in favor of it, but its supporters expressed delight at that percentage being so high. 

In the wake of the Swiss plebiscite, commentators made several points about guaranteed income, with varying amounts of merit.  They suggested that it would cause reduced motivation for working, which is correct, but that would be held to a favorable level, reducing demand for work to something approximating the number of jobs available, if the stipend amounts were more like the $10,000 I have recommended instead of the too-high $30,000+ on which the Swiss voted, which would mean that people would need other sources of money if they wanted, for example, cars and sit-down restaurant meals.  (Interestingly, only 2% of Swiss citizens surveyed thought even the amount on which they voted would cause them to leave their jobs, but one-third thought others would do that – I suspect that Americans have the same perception gap.)

Writers also mentioned, as one put it, the problem of losing “the centrality of paid work to the way people live.”  That would be a more valid concern if it were not happening already, and there were fewer than the current 94 million not in the labor force at all.  The idea that the market, or “capitalism” in one commentator’s words, has always provided new jobs and so will continue to do that is also weak, since the only positions beyond extraction, manufacturing, and services are unpaid.  And it silly to suggest, as two did, that there would be a “stigma” about getting money every American would receive.

Three things from recent articles were more worthwhile.  The first was a chart in The Economist’s June 4th “Sighing for paradise to come,” a fine comprehensive piece despite its misleading title.  It showed how much money 12 different developed countries were now spending annually per person on social, non-health-care programs.  That, a starting point for funds redirectable to guaranteed income, showed that Denmark and Norway were highest at $10,900 and $10,700, with Sweden, Finland, and France also over $9,000 and Germany at $8,300.  The United States came in at $6,000, still a large amount and higher than Japan, Australia, New Zealand, and Canada.  I have seen little before about two other concerns mentioned, that such redistribution, since it would benefit those with high incomes along with others, would be regressive, and that it would be incompatible with either open borders or with all residents receiving equal treatment.  Those may actually be good things, but are worthy of continuing discussion.

So where is the idea of guaranteed income going from here? Brazil, Canada, the Netherlands, and even India are now running small-scale experimental rollouts on it.  In Finland, 10,000 adults will receive 550 euros per month, or about $7,500 annually, for two years, toward possible national implementation.  It is hardly unthinkable that Switzerland might try another vote with a lower amount.  Two sources of increased American taxes worthy of consideration would be higher ones on estates, mentioned by Eduardo Porter in The New York Times, and a levy on financial transactions.  Both would affect those in the higher income brackets the most, paying for much of the stipends going to their economic peers.  Charles Murray, a nationally-known conservative author and commentator who has written before on basic income, is scheduled to soon publish an update to his previously released plan to provide $10,000 to each American 21 or over without increasing any taxes.

Overall, though, the bottom line is that it is premature to implement a guaranteed income in the United States.  There are still 151 million Americans employed, which, though decreasing as a percentage, is only doing so slowly.  That, though, is not the same as saying we should not be talking about it or even planning for it.  Perceptions can move at glacial paces, and this one may go from radical to necessary as soon as a couple of presidents from now.  “Forewarned is forearmed” is an ancient proverb for a reason, and dealing with guaranteed income before it is needed will prove to be one more example.          


  1. Very insightful article on Universal basic Income. My take is that people need to rise up the Maslow's Pyramid with access to good education and a better life to be more entrepreneurial. Read more on:

    1. Thank you very much! The effects of such an income would be profound, and, indeed, people would get further up that pyramid once fulfillment of their lower-level needs was assured.