SPECIAL ANALYSIS SHOULD THE FEDERAL GOVERNMENT GUARANTEE A MINIMUM CASH INCOME TO ALL CITIZENS? 1967-68 COLLEGE DEBATE TOPIC AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POL!C Y RESEARCH 1200-17THSTREET, N.W.-WASHINGTON, D. C. 20036 THE AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH, established in 1943, is a nonpartisan research and educational orgonizotion which studies notional policy pro bl ems. Institute publications toke two major forms: 1. LEGIS LATIVE AND SPECIAL ANALYSES - foctuol analyses of current legislative proposals and other public policy issues before the Congress prepared with the help of recognized experts in the academic world and in the fields of low and government. A typical analysis features: (1) pertinent background, (2) a digest of significant elements, and (3) a discussion, pro and con, of the issues. The reports reflect no policy position in favor of or against specific proposals. 2. LONG-RANGE STUDIES - basic studies of major notional problems of significance for public policy. The Institute, with the counsel of its Advisory Boord, utilizes the services of competent scholars, but the opinions expressed ore those of the authors and represent no policy position on the port of the Institute. ADVISORY BOARD Poul W. McCracken, Chairman Edmund Ezra Day University Professor of Business Administration University of Michigan Karl Brandt Loy W. Henderson Professor of Economic Policy (Emeritus) Director, Center for Diplomocy Stanford University end Foreign Policy Milton Friedman American University Paul S. Russell Distinguished Felix Morley Service Professor of Economics Editor and Author University of Chicago Gottfried Haberler Stanley Parry Galen L. Stone Professor Professor of Political of International Trade Science Harvard University Trinity College, D. C. C. Lowell Harriss E. Blythe Stoson Professor of Economics Deon Emeritus, Low School Columbia University University of Michigan George E. Taylor Director, Far Eastern & Russian Institute University of Washington OFFICERS Chairman Carl N. Jacobs Vice Chairmen Henry T. Bodman Clyde T. Foster H. C. Lumb President Treasurer William J. Baroody Henry T. Bodman Thomas F. Johnson Joseph G. Butts Director of Research Director of Legislative Analysis Howard Friend Earl H. Voss Director of Public Finonce Analysis Director of International Studies October 20, 1967 SHOULD THE FEDERAL GOVERNMENT GUARANTEE A MINIMUM CASH INCOME TO ALL CITIZENS? 1967-68 College Debate Topic TABLE OF CONTENTS PREFACE---------------------------------------------------------- v CHAPTER I. INTRODUCTION--DEFINITIONS AND INTERPRETATIONS----------- 1 I. The Proposition------------------------------------ 1 II. Why the Federal Government?------------------------ 1 III. What Do We Mean By ''Guarantee''?-------------------- 9 IV. What Do We Mean By A Minimum Annual Cash Income?--- 12 V.All Citizens----�---------------------------------- 16 VI. Conclusion----------------------------------------- 17 . D1scuss1on Quest1 ons------------------------------ 18 Bibliography-------------------------------------- 20 II. THE EXTENT AND NATURE OF POVERTY IN THE UNITED STATES--- 23 I. Defining Poverty----------------------------------- 23 A. The Council of Economic Adviser's Data-------- 24 II. Concentration of Poor Among Particular Regions and Groups------------------------------------------- 28 A. Regional Poverty------------------------------ 28 B. Concentrations of Poverty Within Particular Groups-------------------------------------- 30 III. Causes of Poverty---------------------------------- 31 A. Low Educational Achievement------------------- 32 B. Unemployable------------------------�--------- 32 C. Unemployment---------------------------------- 33 D. Poverty and Race------------------------------ 33 - i - CHAPTER IV. Some Costs and Effects of Poverty------------------ 34 A. Direct Economic Costs of Poverty-------------- 34 B. Indirect Cost to the Economy------------------ 34 V. Conclusion----------------------------------------- 35 . D1scuss1on Qu est1ons------------------------------ 36 Bibliography-------------------------------------- 37 III. THE RANGE OF CURRENT FEDERAL PROGRAMS TO ALLEVIATE POVERTY----------------------------------------------' 44 I. Introduction--------------------------------------- 44 II. Income Maintenance Programs for the Poor Outside the Labor Force---------------------------------- 45 A. The Old-Age, Survivors, and Disability Insur- ance System--------------------------------- 45 B. Public Assistance----------------------------- 47 C. Veterans Pensions----------------------------- 51 III. Programs for the Poor in the Work Force------------ 53 A. Job Creation and Work Relief------------------ 53 B. Depressed Area Programs----------------------- 56 C. Unemployment Insurance------------------------ 57 D. Minimum Wages--------------------------------- 58 IV. Provision of Services and Goods-------------------- 60 A. Services for Children------------------------- 60 B. Food Distribution Programs-------------------- 61 C. Housing--------------------------------------- 62 D. Medical Services------------------------------ 64 V. Conclusion----------------------------------------- 64 Discussion Questions------------------------------ 66 Bibliography-------------------------------------- 67 IV. PROBLEMS INVOLVED IN PRESENT PROGRAMS------------------- 69 I. Introduction--------------------------------------- 69 II. Creating Jobs for the Poor------------------------- 70 III. Are Present Income Maintenance Programs Adequate?-- 83 A. Payments in Cash------------------------------ 84 B. Help in Kind---------------------------------- 93 - ii - CHAPTER Page IV. A Final Note--------------------------------------- 97 . D•iscuss ion Questio ns------------------------------ 98 Bibliog!aphy-------------------------------------- 100 V. GUARANTEED INCOME PLANS--MECHANICS AND PROBLEMS--------- 104 I. Introduction------------------------ ---------------- 104 II. The Possible Approaches---------------------------- 104 III. Mechanical Problems-------------------------------- 106 IV. The Question of Cost------------------------------- 110 V. The Financial Adequacy of Various Guaranteed Income Proposals--.------------------------------------- 115 VI. The Disincentive Problem Revisited----------------- 116 VII. The Responsible Use of Unrestricted Grants--------- 120 VIII. The Problem of Birth Control----------------------- 121 IX. The Possibilies of Public Work--------------------- 122 X. A Final Note--------------------------------------- 125 . Discussion Questio ns------------------------------ 126 Bibliography-------------------------------------- 128 VI. SELECTED FOREIGN EXPERIENCES IN INCOME MAINTENANCE------ 139 INTRODUCTION------------------------------------------- 139 I. CANADA--------------------------------------------- 139 A. Characteristics of the Canadian Labor Force--- 139 B. Employment and Manpower Policies-------------- 140 1. Counteracting Seasonal Unemployment------ 141 2. Promoting Regional and Area Expansion---- 142 3. Vocational Education--------------------- 143 C. Welfare Programs------------------------------ 144 1. Federal Programs------------------------- 145 2. Federal-Provincial Programs-------------- 147 3. Provincial Programs---------------------- 149 - iii - CHAPTER I I. FRANCE-----------------------·-----------------·----- 150 A. Employment and Manpower Policies-------------- 150 1. The Employment Exchange------------------ 151 2. Vocational Guidance and Training--------- 151 3. Geographical Mobility-------------------- 152 B. Welfare and Social Security Programs---------- 153 1. Unemployment Insurance------------------- 153 2. Provision for the Disabled--------------- 154 3. Social Insurance--Old-Age Pensions------- 155 4. Family Allowances------------------------ 156 C. Summary--------------------------------------- 157 III. SWEDEN--------------------------------------------- 157 A. Characteristics of the Swedish Labor Force---- 157 B. Employment and Manpower Programs-------------- 158 1. Operations of the National Labor Market Board--------------------------- 158 2. Programs to Combat Regional Unemployment- 159 3. Programs to Combat Technological Unemployment--------------------------- 161 4. Pr.Jgrams to Combat Cyclical Unemployment- 162 C. Welfare Programs------------------------------ 164 1. Unemployment Insurance------------------- 164 2. Old-Age Pensions------------------------- 164 3. Family Allowances------------------------ 165 A FINAL NOTE------------------------------------------- 166 Discussion Questions-----------�------------------ 167 Bibliography-------------------------------------- 169 - iv - PREFACE This Special Analysis is concerned exclusively with the issues presented by the 1967-68 intercollegiate debate proposition: "Resolved: THAT THE FEDERAL GOVERNMENT SHOULD GUARANTEE A MINIMUM ANNUAL CASH INCOME TO ALL CITIZENS." It is being published by the American Enterprise Insti­ tute in response to the many requests from college debaters and coaches for background materials and references on the subject of the debate prop­ osition. It was prepared by Professor John A. Lynch, director of debate at St. Anselm's College, Manchester, New Hampshire, and Mr. Robert M. Shrum, director of debate at Boston College, Boston, Massachusetts. Both authors come to the project with extensive backgrounds as intercollegiate debaters and debate coaches. The analysis should not be construed as reflecting any policy position on the part of the American Enterprise