by Paula Dwyer, BloombergQuickTake – – June 3, 201:
Should the government guarantee every citizen an annual stipend, no strings attached, no questions asked?
That sounds like an idea that would have more liberal backers than conservatives. But what if the stipend took the place of the many programs that make up the safety net in most countries? That might appeal to conservatives but make liberals queasy.
The idea is known as universal basic income, though in the U.S. it might be described as Social Security for all (adults). Experiments are planned or underway in parts of Europe, Canada and South America.
The results could reveal if a guaranteed basic income makes recipients lazy and unproductive or frees them to be more creative and useful. The results might also shift longstanding debates over the social contract between a government and its citizens: How big should the safety net be, and what mix of incentives and protections would make it more effective?
Switzerland will hold a June 5 referendum on whether to give every adult citizen 2,500 Swiss francs ($2,526) a month. The government has opposed the idea, arguing that it would force a tax increase and hamstring the economy by causing a shortage of skilled workers, which would send jobs abroad.
The city of Utrecht in the Netherlands is conducting a pilot program and trials of the idea are planned in Finland and the Canadian province of Ontario. A British proposal is gathering interest. A nonprofit group will soon start giving 6,000 Kenyans a guaranteed income for at least a decade and follow the results.
In the U.S., Democratic presidential candidate Bernie Sanders says he’s “sympathetic” to the theory behind a universal basic income but stops well short of advocating it. Hillary Clinton, his rival, seems even less enthusiastic.
By contrast, conservative economists, politicians and think-tank scholars are not as hesitant. Marco Rubio, the Republican senator from Florida who was a presidential contender, proposed the beginnings of a basic income in his 2015 tax plan.
In the 1960s, a basic income was part of the mainstream political discussion in the U.S.
President Richard Nixon even proposed an income floor, based on ideas developed by Daniel Patrick Moynihan, then a domestic-policy adviser.
The earned-income tax credit, a form of basic income, took its place, but only to supplement the earnings of the working poor. The tax credit was first proposed in 1962 by conservative economist Milton Friedman. One of his aims was to end the “earnings cliff,” in which government aid disappears once income exceeds a cap. Such a limit discourages recipients from working. The tax credit is widely considered an effective anti-poverty program, but the earnings-cliff issue has only gotten worse: The U.S. now has more than 80 low-income programs, each with its own eligibility rules and earnings caps.
Some progressives see universal basic income as the ultimate expression of what a developed economy can achieve: a way to lessen poverty and inequality, and ease the pain of job loss and economic stagnation.
But in the U.S., many liberals see it as naive and a distraction from more practical priorities, such as a $15 minimum wage and paid family leave. And they fear that a basic income would, in the end, be less than what many people get when all the federal government's cash and social-service programs are combined.
For conservatives, the attraction is smaller government. Dozens of social-welfare programs now costing U.S. taxpayers about $1 trillion a year could be folded into a basic-income program, they argue.
Today, some of the biggest basic-income evangelists can be found in Silicon Valley, where supporters see it as one solution to potentially large job losses — and consumer backlash — from driverless cars, robotics, 3-D printing and other parts of the digital economy.
The fear that people with a guaranteed basic income would become slackers may be unfounded. One economist who studied trials conducted in the 1970s in Canada reported the opposite: Recipients were healthier and finished high school at higher rates. Adults with full-time jobs worked the same number of hours with one exception: Women took off more time after having a baby.
by Stephen J. Dubner, FreakonomicsRadio – – April 13, 2016:
A lot of full-time jobs in the modern economy simply don’t pay a living wage. And even those jobs may be obliterated by new technologies. What’s to be done so that financially vulnerable people aren’t just crushed? It may finally be time for an idea that economists have promoted for decades: a guaranteed basic income.
Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post.
I’m Stephen Dubner, and this is Freakonomics Radio. If you are new to the show, you might assume from its name that we deal with straight-ahead economics – employment, cost of living, things like that. But if you’ve been listening for a while, you know we don’t do much straight-ahead economics. We tend to favor stories like the economics of sleep; we do stories about the significance of the lowly pencil; we even made a show about the unlikely triumph of the belt.
This week’s show deals with a straight-ahead economic issue. It’s about an idea whose time finally may have come.
An idea that may present a solution to two separate problems. The first problem is that a lot of full-time jobs in the modern economy simply don’t pay a living wage. The second problem is that even a lot of those jobs may not be around for long.
Erik Brynjolfsson is an MIT professor who deals with the economics of technology.
ERIK BRYNJOLFSSON: We’re now beginning to have machines be able to augment and automate our brains and replace mental tasks. Machines can do computations and make decisions and we’re still in the early stages of this, but we believe that the implications will be at least as profound as what the Industrial Revolution did for our muscles.
In a book he co-authored with Andrew McAfee, Brynjolfsson calls this technological disruption the “second machine age.” Yes, it will likely produce gains in living standards but it also might lead to a massive evaporation of jobs. This can be aggressively argued in either direction.
BRYNJOLFSSON: There are folks who are confident that technology is going to lead to a bounty for all and make everyone better off. And there are other people who are very concerned that we’ll have a jobless future and a lot of people will be left in poverty.
Take just one example: driverless cars, a technology I’m sure you’ve heard something about. It is not hard to believe that in 10 or 30 or 50 years, many of our vehicles will drive themselves. So what happens to all the people who drive for a living – all those taxis and Uber cars and ambulances and heavy trucks. In the U.S. alone, that’s roughly 3.5 million people. Sure, some jobs will be created by driverless technology. But what are all those drivers supposed to do when their livelihood is obliterated?
BRYNJOLFSSON: There will be winners and losers. Already we’re seeing that some kinds of tasks and skills are much less valuable and people with those tasks and skills have seen their wages fall. And so it hasn’t been a rising tide that lifted all boats.
So, if there’s a massive evaporation of jobs, and if too many hard-working people continue to earn too little to live on, what happens next? Could one solution to both problems be an idea that’s been floating around in economics circles for decades?
Here’s the idea: what if everyone automatically received, from the government, a guaranteed basic income?
There are of course many forms of government welfare around the world, but universal payouts are rarer. The Alaskan government, for instance, has since 1982 paid a dividend on oil revenues to all residents, about $1,100 a year on average. (Not exactly enough to live on.) But several governments are looking at more substantial payments.
In some cases, everyone would get a payout – rich or poor, employed or not. In others, only low-income people would benefit.
Switzerland is planning a referendum – which probably won’t pass, to be honest – that would pay every adult around $2,600 a month, and every child about $650.
Similar proposals are under consideration in parts of The Netherlands, Spain, and Canada.
And Finland is considering an experiment that would give up to 10,000 people roughly $625 a month, tax-free, which would replace most existing welfare benefits.
How about in the U.S.?
The idea has not gotten much traction in Washington, although Bernie Sanders has expressed his sympathy for it — perhaps not too surprising for a self-declared socialist. But that’s the thing about the guaranteed income idea. You can see why a socialist, or just about anyone on the left, might like it — theoretically, at least; it’s a permanent financial safety net.
But conservatives should also like it, again, at least theoretically, because it’s a way to shrink the welfare state by folding up a bunch of byzantine entitlement programs into one tidy check.
Now, what would a guaranteed-income program actually look like? Where would the money come from? And if you give everyone in America a check for something like $20,000 every year, wouldn’t inflation render the poor people just as poor as before?
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