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Maine Policy Review

Volume 27 Issue 2

2018

Universal Basic Income: Policy Options at National, State, and Local Levels

Michael W. Howard University of Maine, [email protected]

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Recommended Citation Howard, Michael W. . "Universal Basic Income: Policy Options at National, State, and Local Levels." Maine Policy Review 27.2 (2018) : 38 -42, https://digitalcommons.library.umaine.edu/mpr/vol27/iss2/5.

This Commentary is brought to you for free and open access by DigitalCommons@UMaine. UNIVERSAL BASIC INCOME

COMMENTARY

Universal Basic Income: Policy Options at National, State, and Local Levels

by Michael W. Howard

n September 11, 2018, Chicago American politicians at the national level requirement, and a partial basic income OMayor Rahm Emanuel announced (Clinton 2017; Obama 2018). that would fall short of that level. A the formation of a task force “to pursue Supporters of basic income include basic income is distinct from other the exploration of Universal Basic Silicon Valley tycoons and others who forms of guaranteed minimum income Income in the city.” Emanuel was worry that and including a (uncon- responding to a resolution proposed by will displace more jobs than ditional, but means tested), a participa- Alderman Ameya Pawar and supported they will create, necessitating new forms tion income (conditional on making by others on the city council (Byrne of income security for those who are some form of meaningful contribution 2018; Coelho 2018; McFarland 2018). displaced. The concept is also supported to society, but not necessarily paid Pawar was inspired by the pilot project by many people who recognize that ), universal child allowances being launched in Stockton, California, current policies are not effective (going unconditionally to all children, which will give 100 people $500 per at eliminating or moving people regardless of means), and capital grants month for 18 months. This project was into work. Other supporters see basic (universal, but given in a lump sum, for motivated by worries about automation income as a way to address rising example, at age 18). and the desire to provide more oppor- inequality, while some supporters see it tunity for people in poor communities as a way to partially decouple income ARGUMENTS IN FAVOR (Crane 2018). Pilot projects with various from paid employment, as a way to kinds of minimum-income schemes recognize and encourage care work, have already hinted at the arguments have been completed, announced, volunteering, or more sustainable living I for basic income. If automation or begun in Oakland, California; (Van Parijs and Vanderborght 2017). displaces more jobs than it creates—a Barcelona, ; Ontario, ; proposition that is debated even among Finland; Scotland; ; ; DEFINITION OF A BASIC INCOME supporters of basic income—then Uganda; ; and the Netherlands decoupling income from labor may be (https://basicincome.org/topic/pilot hat is a basic income? Is it a necessary to avoid growing poverty. An -experiments/; Haarmann and Haarmann Wdesirable and feasible policy? And Oxford University study predicted that 2014; Kotecki 2018; McFarland 2017a, could such a policy be implemented on nearly half of all jobs in America will 2017c; Standing et al. 2015). In 2016, a state or local level? likely be eliminated by automation in Swiss citizens initiated and voted on a Although press coverage is rather the next few decades (Frey and Osborne referendum to give every Swiss citizen vague, most researchers use the term 2013). Think of drivers displaced by self- an unconditional basic income adequate basic income to refer to an income that driving vehicles, food-service workers for basic needs and a life of dignity is given to all, periodically rather than in displaced by robot waiters, and retail (Martin 2016), and a European-wide a lump sum, individually rather than to sales clerks displaced by automatic initiative for basic income, with the households, and not conditional on checkout machines. This conclusion support of 300,000 EU citizens, was need, willingness to work, or other has been challenged by critics noting presented to the European Parliament behavioral requirements. Some add that that, although tasks within jobs may be in 2013–2014 , but was voted down a basic income is sufficient for basic eliminated, the jobs may remain and be in 2017 (McFarland 2017b). There is needs, but exactly what this level is, is redefined (Arntz, Gregory, and Zierahn worldwide interest in basic income, and subject to much debate. We can distin- 2016; Chui, Manyika, and Miremadi the concept has been considered favor- guish roughly between a full basic 2016;). Still, if 60 percent of a job can ably, if not yet embraced, by some income that would satisfy some such be taken over by a computer, then there

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may be a need for only 40 percent of would arise from trying to administer modest proposals of about half this level, the workers in that occupation. Actual wages for housework. In addition, a such as that of Facebook cofounder job loss might be closer to 9 percent, basic income would facilitate other kinds Chris Hughes (2018), who favors a according to Arntz, Gregory, and of meaningful, but unremunerated, means-tested negative income tax with a Zierahn (2016). contributions to society, such as volun- work requirement—but broadening the Related to, but distinct from, the teering for nonprofit organizations. definition of work to include care work automation argument is the argument and other socially useful activities— from precarity—an insecure or unpre- ARGUMENTS AGAINST could be funded with moderate tax dictable existence, which may affect a increases on those making more than person’s psychological well-being— mong objections to basic income, $250,000 per year. (Standing 2014). Although the American Athe two most prominent are finan- There are other ways of funding a economy has been creating jobs steadily, cial and moral. The gross cost of a basic basic income besides income tax. Andrew many of these jobs are part-time, tempo- income appears quite large. If every legal Yang (2018), who is running for the rary, and poorly paid. Thus a second US resident were given an annual basic Democratic presidential nomination in argument for basic income is that it is income of, say, $12,000 per adult, and 2020, favors a basic income of $1,000 needed to ensure that workers have $6,000 per child, the gross cost would per month, funded by a value-added tax adequate income and do not need to be $3.415 trillion (Widerquist 2017). (cf. Walker 2016). Peter Barnes (2014) work two full-time jobs, or several part- But the gross cost is not very mean- favors taxing common resources, such as time jobs, to make ends meet. A basic ingful. Everyone would receive a basic natural resources, electromagnetic spec- income, which at first glance appears to income, but the more affluent would trum, the use of the atmosphere as a be anti-work by giving people income be net contributors: they would pay carbon sink, and the right to create not conditional on willingness to work, more in taxes than they would receive money, which could support a basic is in fact more work friendly than the in basic income. The poor would be net income of around $5,000 per year, rather current system, which creates a poverty beneficiaries. And some people would than being given away to private compa- trap: people do not seek employment for break even. nies. Barnes’s model is ’s Permanent fear of losing their means-tested and The more interesting question is the Fund Dividend, around $1,400 per year conditional benefits. Because people net cost for the net contributors. The paid to every Alaskan, including chil- keep their basic income when they find answer varies depending on how a basic dren, from the annual interest earned by employment, this disincentive to a job is income is integrated with the tax system. Alaska’s , which completely eliminated. But with a 50 percent tax surcharge on has been capitalized with royalties paid A third argument for basic income earned income, the net cost would be by oil companies drilling on the North challenges what we mean by work. Much less than one-sixth of the gross cost, Slope since the 1970s. The dividend has of the necessary work in our society is $539 billion. And that is without consid- contributed to Alaska’s relatively low not counted as part of GDP (gross ering the potential elimination of other rates of poverty and inequality domestic product), and is done without programs, such as food stamps or (Widerquist and Howard 2012a, 2012b). remuneration, and often in conditions of Temporary Assistance for Needy Families Hillary Clinton (2017) considered economic dependency. This fact is espe- (TANF) benefits, which might be redun- proposing something similar, “Alaska for cially true for household care of children dant with a basic income. Furthermore, America,” during her presidential and the elderly, which is done dispropor- this net cost also does not take into campaign. There are pros and cons to tionately by women. A basic income account the savings that would likely these different funding schemes, but the would give recognition to this work, result from improved health and lower main point is that a basic income is afford women some measure of economic crime rates. Although $539 billion is affordable. independence, and at an adequate level, still expensive, it is feasible. Especially if The bigger hurdle may well be the lift them and their children out of we consider that it would completely moral objection, that it is wrong to give poverty. Moreover, it would do so eliminate poverty for 43 million people, people “something for nothing.” without the bureaucratic difficulties that including 14.5 million children. More Wouldn’t this be taxing hard-working

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people to give income to able-bodied unconditional income will promote lazi- (Van Parijs and Vanderborght 2017). free-riders? Isn’t it better to stick with ness.) Whether you are fortunate enough But the idea is also favored by social our current system of benefits, condi- to inherit wealth, or have family connec- movements, such as the Movement for tional on a willingness to work? Doesn’t tions or other advantages of affluence, is Black Lives (https://policy.m4bl.org the social contract include a principle of a matter of luck—something that Chris /reparations/). The social conditions are reciprocity—that those who receive Hughes (2018) lucidly illustrates from certainly favorable for a national debate from society should, if they are able, give his own experience. about basic income. back by contributing to society? All that basic income does is Are basic-income policy proposals Responses to this objection are of distribute this luck—the unearned relevant at the state or local level? Alaska’s two sorts. The first concedes the prin- income—more equally, so that everyone Permanent Fund Dividend illustrates ciple of reciprocity, but argues, pragmat- starts out on a more level playing field. how states can create dividends from ically, that conditionality is not worth Reciprocity is not rejected; it just comes sovereign wealth funds, or more directly the cost. Most people, if given a modest into play on the foundation of a more from taxation of the use of common basic income, will use it to enable them- fundamental principle of guaranteeing assets. But what about resource-poor selves to participate in society. Most will everyone a fair share of assets. Above the states like Maine? Gary Flomenhaft seek employment in order to have more basic income, earned income is distrib- (2012) calculated that even Vermont, than a poverty-level income. Some will uted in proportion to work (Van Parijs also a resource-poor state, has enough elect to stay at home with children or and Vanderborght 2017). resources that, if all the rents were taxed, aging parents. There is evidence to and the revenue distributed as dividends, support these claims from numerous POSSIBLE NATIONAL, every citizen could receive between experiments with minimum income. A STATE, AND LOCAL $1,900 and over $10,000 annually. Of few may choose to live very simply—in BASIC-INCOME POLICIES course, clawing back these resources itself an environmental boon—while after having turned them over to private focusing their time on volunteering, t is not too difficult to imagine a companies would face major political further education, or artistic creativity. If Ibasic income being adopted at a challenges. fears about automation materialize, a national level. After all, in the 1960s A more modest, partial basic income basic income will facilitate work-time and early1970s, there was support across could be created at the state level in reduction and work sharing (whether or the political spectrum for a guaran- several ways. A state-level carbon tax, not these are legislated), so that people teed minimum income. Martin Luther desirable as a way to reduce fossil-fuel can enjoy greater leisure, rather than King (1967) endorsed the idea. George emissions, could yield a significant suffer greater insecurity, as the produc- McGovern ran as the Democratic candi- universal dividend, and the dividend tivity of labor rises. If there are a few date for president favoring a demogrant would rectify an otherwise regressive and loafers who decide to do nothing or to (Mound 2016), a kind of guaranteed unpopular consumption tax. A carbon take drugs—and let’s face it, the current minimum income. Libertarian econo- tax with progressive tax reductions has system does not prevent this—the mist (1962) favored been implemented successfully in British resulting harm is outweighed by the a negative income tax, a means-tested, Columbia (Durning and Bauman 2014). social benefits of unconditional income but otherwise unconditional minimum The earned income tax credit, which for all. income. ’s Family exists at the state as well as the federal The second response challenges the Assistance Plan was a modified version level, could be made refundable. That is, principle of reciprocity by noting that of Friedman’s proposal, and it passed those without earned income would much of the income in modern capitalist the House, but failed to pass in the receive a credit, increasing their income societies is already decoupled from labor. Senate (Steensland 2017). Poverty is when it falls below a minimum. It is Many people inherit wealth and can live still with us, inequality is rising, and unlikely that refundable tax credits or entirely on interest and dividends, we face new threats from technological carbon taxes at the state level could be without doing a day’s work in their lives. change. Among political parties, the large enough to adequately address (That many of these people do work is a Green Parties around the world are the either the environmental requirements further answer to those who think strongest supporters of basic income or the income needs, but policies at the

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state level can pave the way for more Clinton, Hilary. 2017. What Happened. New Kotecki, Peter. 2018. “Chicago Could Be adequate policies at the federal level, York: Simon & Schuster. the Largest US City to Launch a Basic Income Pilot—Here Are the Other Coelho, Andre. 2018. “Chicago, US: Chicago when the political environment there Major Experiments around the World.” Moves Forward with UBI Proposal.” becomes more favorable. Business Insider (July 23, 2018). Basic Income News (September https://www.businessinsider.com Other policies that could be intro- 15, 2018). https://basicincome.org /chicago-basic-income-other duced at the state level are a universal /news/2018/09/chicago-us-chicago -experiments-around-world-2018-7 child allowance or a refundable child tax -moves-forward-with-ubi-proposal/ Martin, Josh. 2016. “: credit. Universal child allowances are Crane, Rachel. 2018. “This California Town Swiss Vote ‘No’ on Basic Income minimum incomes that go to all chil- Will Give a $500 Monthly Stipend to Referendum.” Basic Income News Residents.” CNNtech (July 9, 2018). dren regardless of means or behavioral (June 28, 2016). https://basicincome https://money.cnn.com/2018/07/09 conditions. .org/news/2016/06/ Lastly, at the municipal or state /technology/stockton-california-basic -income-experiment/ McFarland, Kate. 2017a. “Current Basic level, pilot projects such as those Income Experiments (and Those Durning, Alan, and Yoram Bauman. discussed earlier can generate public So Called): An Overview.” Basic 2014. “All You Need to Know about Income News (May 23, 2017). https:// discussion of minimum-income policies BC’s Carbon Tax Shift in Five Charts.” basicincome.org/news/2017/05/page/2/ and empirical evidence to inform policy Sightline (March 11, 2014). https:// making. Any Maine city, particularly www.sightline.org/2014/03/11/ McFarland, Kate. 2017b. “European Parliament Rejects Proposal to with grant support, could launch similar Flomenhaft, Gary. 2012. “Applying the Encourage Consideration of Basic experiments. - Alaska Model in a Resource-Poor State: Income.” Basic Income News The Example of Vermont.” In Exporting (February 25, 2017). https:// REFERENCES the Alaska Model: Adapting the basicincome.org/news/2017/02/ Permanent Fund Dividend for Reform Arntz, Melanie, Terry Gregory, and Ulrich around the World, edited by Karl McFarland, Kate. 2017c. “Overview Zierahn. 2016. “The Risk of Automation Widerquist and Michael W. Howard, of Current Basic Income Related for Jobs in OECD Countries: A 85–108. New York: Palgrave-Macmillan. Experiments (October 2017).” Basic Comparative Analysis.” OECD Income News (October 19, 2017). Social, Employment and Migration Frey, Carl Benedikt, and Michael https://basicincome.org/news/2017/10 Working Papers, No. 189. Paris: A. Osborne. 2013. The Future of /page/2/ OECD Publishing. doi.org/10.1787 Employment: How Susceptible Are /5jlz9h56dvq7-en Jobs to Computerization? Oxford: McFarland, Kate. 2018. “Chicago, US: City Oxford Martin School. https://www Considers Resolution to Investigate Barnes, Peter. 2014. With Liberty and .oxfordmartin.ox.ac.uk/downloads Basic Income Pilot.” Basic Income Dividends for All. San Francisco: /academic/The_Future_of_Employment News (July 24, 2018). https:// Berrett-Koehler. .pdf basicincome.org/news/2018/07/ Byrne, John. 2018. “Task Force Will Study Friedman, Milton. 1962. Capitalism and Mound, Joshua. 2016. “What Democrats Whether Chicago Should Impose Freedom. Chicago: University of Still Don’t Get about George a Universal Basic Income to Help Chicago Press. McGovern.” New Republic (February Struggling Families.” Chicago Tribune 29, 2016). https://newrepublic.com (September 11, 2018). http://www. Haarmann, Claudia, and Dirk Haarmann. /article/130737/ chicagotribune.com/news/local/politics 2014. “Pilot Project.” Basic Income /ct-met-rahm-emanuel-universal-basic Grant Coalition (South Africa). http:// Obama, Barack. 2018. “Nelson Mandela -income-pawar-20180911-story.html www.bignam.org/ Lecture.” National Public Radio (July 17, 2018). https://www.npr Chui, Michael, James Manyika, and Mehdi Hughes, Chris. 2018. Fair Shot: Rethinking .org/2018/07/17/629862434/ Miremadi. 2016. “Where Machines Inequality and How We Earn. New Could Replace Humans and Where York: St. Martin’s Press. Standing, Guy. 2014. The : The They Can’t (Yet).” McKinsey Quarterly New Dangerous Class. New York: King Jr., Martin Luther. 1967. Where (July, 2016). https://www.mckinsey Bloomsbury Academic. Do We Go from Here: Chaos or .com/business-functions/digital Community? Boston: Beacon Press. Standing, Guy, Sarath Davala, Renana -mckinsey/our-insights/where-machines Jhabvala, and Soumya Kapoor Mehta. -could-replace-humans-and-where 2015. Basic Income: A Transformative -they-cant-yet Policy for India. London: Bloomsbury Academic.

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Steensland, Brian. 2017. The Failed Welfare Revolution: America’s Struggle over Guaranteed Income Policy. Princeton: Princeton University Press. Van Parijs, Phillipe, and Yannick Vanderborght. 2017. Basic Income: A Radical Proposal for a Free Society and a Sane Economy. Cambridge, MA: Harvard University Press. Walker, Mark. 2016. Free Money for All: A Basic Income Solution for the Twenty- First Century. New York: Palgrave. Widerquist, Karl. 2017. “The Cost of Basic Income: Back-of-the-Envelope Calculations.” Basic Income Studies 12(2): 107. Available at https://works .bepress.com/widerquist/75/ Widerquist, Karl, and Michael W. Howard. 2012a. Alaska’s Permanent Fund Dividend: Examining Its Suitability as a Model. New York: Palgrave-Macmillan. Widerquist, Karl, and Michael W. Howard. 2012b. Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World. New York: Palgrave-Macmillan. Yang, Andrew. 2018. : The Truth about America’s Disappearing Jobs and Why Universal Basic Income Is Our Future. New York: Hachette Books.

Michael W. Howard is a professor of philosophy at the University of Maine. His research interests are in theories of justice, including global justice, economic justice, and climate justice. He has coedited two books on Alaska’s Permanent Fund Dividend. He is the national coordinator for the US Basic Income Guarantee Network and coeditor of the journal Basic Income Studies.

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