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The idea of the government giving all citizens enough money to get by seems a bit like socialism, but many libertarian conservatives are getting behind it. A basic income could replace entitlement programs, cut down on poverty rates, and give people more freedom and flexibility in the job market. The idea was popularized by market economist Milton Friedman, and tested in several American cities by President Richard Nixon in the 1970s. We explore the ‘Guaranteed Basic Income’ and its intriguing appeal to people across the political spectrum.
- Veronique De Rugy Senior Research Fellow, Mercatus Center at George Mason University
- Dylan Matthews Staff Writer, Vox.com
- Erik Olin Wright Professor of Sociology, University of Wisconsin Madison
MR. KOJO NNAMDILast fall Swiss voters went to the polls to decide if all citizens should get a guaranteed basic income of about $2800 per month of no-strings-attached cash. That's the kind of socialist European welfare state policy that couldn't possibly work in the United States, right? Not exactly. The idea of guaranteeing an income has been around in the U.S. for decades and was actually tested in a number of American cities in the 1970s under President Richard Nixon. While it may seem farfetched, the idea of a simple paycheck in place of other assistance programs like welfare, unemployment and social security attracts small government conservatives and bleeding heart liberals alike.
MR. KOJO NNAMDIJoining me now to discuss the idea of a guaranteed income is Veronique De Rugy. She is senior research fellow at the Mercatus Center at George Mason University. Thank you for joining us.
MS. VERONIQUE DE RUGYThank you for having me, Kojo.
NNAMDIAnd joining us by phone from New Hampshire is Dylan Matthews, staff writer with Vox.com. Dylan, thank you for joining us.
MR. DYLAN MATTHEWSIt's a pleasure.
NNAMDIJoining us by phone from Michigan is Erik Olin Wright. he's a professor of sociology at the University of Wisconsin Madison. Erik Olin Wright, welcome.
MR. ERIK OLIN WRIGHTHi.
NNAMDIYou too can join the conversation. Give us a call, 800-433-8850. Would a guaranteed income be better than a complex set of assistance programs? Are we better off giving cash instead of food stamps and unemployment benefits? Let's hear from you, 800-433-8850. You can send email to firstname.lastname@example.org or send us a tweet @kojoshow. Dylan Matthews, we've seen this idea in many forms and referred to by many names, the guaranteed basic income or universal basic income. One plan is called the negative income tax which distributes money through tax refunds. What's the basic idea behind all of these plans?
MATTHEWSThe point of commonality with all of them is the idea that the government should guarantee that no citizen or person within its orbit falls below a certain income threshold. Some of the plans do that by distributing a set amount of cash to every adult or every adult plus child, every household. Others, like the negative income tax, distribute only if you fall below a certain income threshold or -- and tax back the benefit as you make more money. But the basic idea is that no one should be living below a certain monetary income over the course of the year. And that it's the government's job to maintain that base level.
NNAMDIDylan, when we hear about this idea, the government literally giving people money to spend how they want, it sounds like the kind of liberal idea that would make people on the right cry socialism. But it was under Republican President Richard Nixon that these ideas were supported and tested in the '60s and '70s. How did those experiments go?
MATTHEWSThere's some controversy as to the exact findings. One commonality in the experiments is that there was a modest reduction in hours worked. And I could spend hours debating exactly what that meant. To some extent it was that people took a longer time to be unemployed and they took a longer time to search for jobs that were right for them. Some of it might've been people no longer desiring to be in the workforce a little bit.
MATTHEWSBut in any case, the effect was rather small. And it was smaller than a lot of people expected. And the one finding that you did see was that people's overall monetary resources improved, as you'd expect from a program that gives people money.
NNAMDIThe idea was popular with a lot of conservative thinkers. We have a clip here of conservative author William F. Buckley interviewing economist Milton Friedman about what he called his negative income tax proposal. You'll hear Buckley's voice first, then Friedman explaining the concept.
WILLIAM F. BUCKLEYWouldn't it follow that your proposal for a negative income tax might actually create a larger class of indolent and unemployed than existing programs?
MILTON FRIEDMANThe proposal for a negative income tax is a proposal to help poor people by giving them money, which is what they need rather than as now by requiring them to come before a governmental official, detail all their assets and their liabilities and be told that you may spend X dollars on rent, Y dollars on food, etcetera and then be given a handout.
MILTON FRIEDMANThe idea of the negative income tax is to treat people who are poor in the same way as we treat people who are rich.
NNAMDIMilton Friedman answering a question from William F. Buckley. Veronique De-Rugy, many people have been surprised that a lot of support for this idea has come from the right, specifically from libertarian thinkers like yourself. What do you like about the government giving people money?
DE RUGYWell, I mean, I think if you say it like this, I don't really like that but I actually think if as a society we decide that we should be giving money to people to help them, which is a noble goal, what is appealing about this idea is that it actually treats poor people as responsible adults. And we assume that they know better what is good for them and their family at all time rather than a bureaucrat in Washington or in a state bureaucracy.
NNAMDIThe idea is if we give the money directly to people, we can get rid of all of these other complicated programs like unemployment insurance and food stamps, and that people would have more freedom to spend the money. What about programs however like health care or mental health services? Won't we still need some of those?
DE RUGYWell, in theory the way this would work -- I mean, this is in theory, right?
DE RUGYAnd for the most part my support is more theoretical because I think in practice there are a lot of problems. But in theory the idea is as you remove all government involvement in antipoverty programs, and that means also a big chunk of government involvement in health care, in theory you should see a remodeling of and it's to shift around and the provision of health care options and solutions that you don't have right now. And in theory again, you know, you would have low income people deciding that they want to use some of it to buy health care insurance or health care treatments at a cheaper rate than is available now.
NNAMDIErik Olin Wright, you are a self-described radical leftwing egalitarian. What do you find appealing about a guaranteed basic income?
WRIGHTNow, some of the things I find appealing actually I do share with libertarians. That is the radically egalitarian notion that all people should have the same freedom in a society. But freedom to be equal means people have to have a basic capacity to put their life plans into effect, which poverty denies people. So part of my impulse for this is indeed very much the same. Minimum government interference telling you how to live your lives but also the egalitarian idea that the positive freedom to be able to do things should be as equally distributed as possible.
WRIGHTI think where I would certainly differ from a conservative's view is both on the problem of how do you properly fund such a project and secondly...
NNAMDIYeah, because one of the main concerns here is that this program is going to cost a lot of money. If we give 300 million Americans 10 or $20,000, that's in the neighborhood of 3 to $6 trillion dollars of spending. Is that really something we can afford? Obviously we're not giving it to every American. We're giving it to families.
WRIGHTWell, the United States has the lowest tax rates of any developed capitalist country. A full 15 or 20 percentage points lower than the highest. There is certainly space within such a low tax regime for substantial increases of taxation to fund such an endeavor. But the other issue of course is what you get rid of when you do it.
WRIGHTSo for me there's a range of public goods that you wouldn't touch. I personally feel that health care is a public good, not just a private good. Education is a public good, not a private good. And we wouldn't want to eliminate government funding for health or education simply because we're providing basic minimum income for people to enter the market for the things they purchase on the market.
WRIGHTSome things I think shouldn't be purchased on the market. But I think we can bracket that issue. That's where I would disagree with a libertarian view of basic income. I think it's better, at this point, to focus on the part of the story where we would agree. And that basically has to do with the expansion and the possibilities for autonomist individuals flourishing in a market economy if everyone is guaranteed an equal dose of what some people have called real freedom. That is the freedom to actually act in the world rather than simply the freedom not to be bossed around in the world.
NNAMDIVeronique De Rugy, same question to you. Where would the money come from?
DE RUGYWhere the money would come from, where it usually comes from, other people, other working Americans and taxes obviously. But, I mean, I'll add about, you know, one of the libertarian principle is I always prefer to give choice to people, always. And we always assume that people are better suited to make choices for themselves.
DE RUGYAnd on education, for instance, while, you know, the basic minimum income wouldn't touch this, I mean, libertarians would favor a system that they are too, you know, give choices to people rather than leave the decision in the hands of bureaucrats.
NNAMDIDo you worry about discouraging people from working? William Buckley, Jr. said, would it make people more indolent. Do you worry about discouraging people from working...
NNAMDI...people have enough money to get by, they won't need to join the labor market?
DE RUGYI mean, I do worry about it. I mean, I think there's a fair amount of evidence that for some people if there's no work incentive added to the system, which is problematic because then it adds up some bureaucracy back into the system, that there is some disincentive. But the current system is just horrendous. It's unfair, it's paternalistic. It's terrible. It's not serving poor people. So we need to come up with a better solution, one that actually serves poor people. And that, I think, is a step in the right direction if we can get around some of its fundamental problem and practice.
WRIGHTBut it's important -- there's no disincentive to work with a basic income. Nobody is punished for working. The means tested programs for the poor do create active disincentives for work. If you start working you actually lose benefits. In unconditional basic income everybody gets it. And when you start earning income you start paying taxes on the income you earned but you don't lose the unconditional basic income. There's no disincentive. It simply is giving people a choice.
WRIGHTSo in the current situation the children of rich people can do unpaid internship. The children of poor families can't because they need an income. With an unconditional basic income, every young adult could do an unpaid internship if that was the optimal strategy for them to put their life plans into effect.
NNAMDIWe're discussing the case for a guaranteed income and inviting your calls at 800-433-8850. Are people better off using government assistance how they want to or should people only be able to buy things like food and housing? What do you say, 800-433-8850? Let's go to Stephen in Washington, D.C. Stephen, you're on the air. Go ahead, please.
STEPHENThank you very much for addressing this topic and taking my call. I'm actually on the coordinating committee of the U.S. Basic Income Guarantee Network, usbig.net. And one of the things about basic income is that it's truly universal so that whatever the amount, whether it's $800 a month or $1,000 a month, all of us on the call would get it, all of our listeners would get it as long as they're citizens. Bill Gates and Oprah Winfrey and the homeless veterans in the street will get it. So it really creates a baseline of justice and equality that can shift the discourse on just about every political issue.
NNAMDIOkay. Thank you very much for your call. Obviously he is a major supporter of it. But Dylan, that allows me to throw you back into the weeds again, if you will, and those 1970's experiments people at a certain poverty level were given cash support. You talked a little bit earlier about trying to weigh the evidence there. How about the evidence about whether it affected how much people worked or whether they worked at all?
MATTHEWSSure. So one interesting finding in the experiments was that in the analogies that I read, economists didn't really notice a lot of people who had cut back on work hours. And to some extent that makes sense. In the early 1970,s we had a much less -- part time work was much less an important part of the economy and fewer people working on an hourly basis probably. But what you did see is longer stints of unemployment and more extensive people dropping out of the labor market.
MATTHEWSAnd there are a few ways you can explain that. One way you can explain that is that people delayed reporting that they had taken a job so as to get more monetary benefits. That seems to have been a little bit of what's going on. To some extent it was that people spent more time searching, which can be desirable or it can mean if people get a better job, if they spend more time searching, that's probably an encouraging sign.
MATTHEWSBut also to some extent I think a lot of the case for a basic income, and Erik has been very eloquent on this point, comes from a critique of the idea that you should need to work to be alive in our society. And a case that real freedom requires a freedom from wage slavery or whatever you want to call it. And so from that perspective it's sort of a feature rather than a bug that basic income would allow certain people, if they wanted to, to drop out of work.
NNAMDIThere's a general sense that -- Veronique.
DE RUGYI just wanted to add something, that this idea of disincentive to work have been a concern to a lot of libertarians. And in fact the negative income tax was supposed to address this. I think Charles Murray that designed -- which is like a watered down version of this is the earned income tax credit. And it was designed so that people wouldn't lose as much of their subsidies while we -- if they got back to work. In a sense they had an incentive to try to accumulate.
DE RUGYAnd even though I agree with Erik, you know, and it's -- when you have a -- like everyone is getting it no matter what, in theory you don't get -- you would expect that you wouldn't get these disincentives to work. But the experiments also that were done in the '90s seems to show. Now we can debate whether it's a problem or not.
DE RUGYI mean -- and I'm not sure where I fall on this. I fall more on the side that I love the idea. I think the current system is horrible. The paternalism is just awful. My real issue and concerns like -- I think we all agree that a universal income may be better than what we have now. The question is, like, do we actually -- are capable, in the political context, to actually replace -- put this in place and replace -- and get rid of everything else? And that's a concern.
NNAMDII want to raise the question of the American ethos, if you will, either Dylan or Erik, you can choose to answer this because it just seems to me that from a cultural standpoint that most Americans are not socialized to want to live at the poverty line.
WRIGHTWell, that's one of the reasons why, in fact, there would still be plenty of labor market participation because people would not -- most people would not want to just simply live on the -- with the basic income. But it does allow people to work part time who couldn't otherwise afford to. And again, it allows people to work for nothing because they want to work for parts -- for various kinds of episodes.
WRIGHTAlso it's important to know we do have a basic income actually in one state in the United States. It's below the poverty line but in Alaska, the Alaska permanent fund distributes the royalties from oil on a per capita basis to all residents of Alaska. It's a couple thousand dollars a year, I believe. That is an unconditional grant given to everybody regardless of whether they're virtuous or not, whether they work or not.
WRIGHTAnd in that rather conservative state people like their unconditional basic royalty grant from the oil revenues.
NNAMDIGot to take a short break. When we come back we'll continue our conversation on the guaranteed basic income. But you can still call us, 800-433-8850 or send email to email@example.com. What's the future of government assistance? With improvements in technology is it realistic to think that we are going to have full employment, 800-433-8850. I'm Kojo Nnamdi.
NNAMDIWelcome back. We're talking with Veronique De Rugy. She is senior research fellow at the Mercatus Center at George Mason University. We're talking about a guaranteed national income. Also joining this conversation is Dylan Matthews, staff writer with Vox.com and Erik Olin Wright who's a professor of sociology at the University of Wisconsin Madison. Another concern with the basic income is that it allows people to spend money on anything they want, whereas with food stamps or housing subsidies they can only go to pay rent and buy groceries.
NNAMDIErik, are you worried about people spending -- well, allow me to put that question in the hands of one of our callers who wants to talk about that. Here is Christine in Baltimore, Md. Christine, go ahead, please.
CHRISTINEHi. Yes. I don't mind -- I mean, I know we have to help the poor and I don't mind giving money. But I do think there should be some regulations. When I'm in the grocery store I see people buying candy and potato chips and sodas, but yet I saw a lady in the Safeway who couldn't buy a rotisserie chicken that was already cooked. Can you explain how they make these rules and regulations?
MATTHEWSI think the existing rules and regulations are somewhat onerous and silly. I mean, I think it's a question of who you want to restrict in this way. I agree that sort of candy and sugary sodas and whatnot are bad for you. And I think that if we think they're bad for you we should have taxes on them to discourage their use, not just among poor people but among all of us.
MATTHEWSI think the thing that troubles me about proposals to what people can spend their welfare money on or their basic income money on is that there's no real equivalent for government programs meant -- well, not meant but which in practice benefit upper income people. I own a house. I benefit from the mortgage interest deduction. I don't need to take drug tests to show that I'm not going to spend my mortgage interest deduction on drugs. I don't have restrictions on what kind of food I can spend my mortgage interest deduction money on.
MATTHEWSThere's a kind of paternalism and nanny statism that tends to come into the fore only when money, if it's being used or resources that are being used by the poor are concerned. And I think that's a trend that troubles me and that I think tends to get injected into the conversations about the basic income.
NNAMDIWe got a tweet from Jalis (sp?) who asks, and I would put this question both to you Erik and to you Veronique, "Would a guaranteed income inflate prices," Veronique?
DE RUGYI mean, I don't know -- I mean, like the money is spent right now in different forms, right? I mean, one thing is sure is that we're not going to save money with this proposal. What we're going to give is freedom to people to actually do what they think is the best for them at the time where it's best. I mean, it's bad enough to be poor. It's -- you don't need to add it to have, like, someone telling you that this particular time you need to spend this much money on housing, this much money on food. And when you buy food it needs to be this type of food that you need to buy.
NNAMDIErik, with all this extra money in the economy, would vendors raise their prices making the whole thing irrelevant? Do you worry about inflated prices?
WRIGHTNo, I don't. And first of all, it's not -- we're not printing money and putting it in the economy. We are taxing people and redistributing money. So it's -- as was just said, it's not -- there's no obvious reason why the total demand and the economy should rise dramatically. But in any case, of course in the present year one of the problems in the economy is insufficient demand not excessive demand.
WRIGHTAlso I wanted to stress one point. I don't think that basic income should be exclusively seen as a program for the poor.
NNAMDIYeah, so many people seem to be interpreting it in that way.
WRIGHTI know. But it is a program. That's one of its virtues is that it solves poverty. As someone once said, the problem with poor people is they don't have enough money. It does solve that problem. But it adds flexibility to the lives of vast numbers of people who aren't themselves poor. It enables people to take time off. It enables groups of people to, for example, more easily engage in the arts. If you're in the arts, one of the problems is that it's very difficult to generate an adequate standard of living exclusively through your artistic work. Well, this would give you a basic income to underwrite theater, dance, music, arts, poetry.
WRIGHTIt would also enable small farmers, for example, to thrive. We could get rid of agricultural subsidies which are justified on the grounds that they help small farmers, but mostly help big agribusiness by giving people a basic income. A small farmer therefore has the basic subsistence that they need generated independently of their farming. And their farming produces discretionary income. That enables small farms to become more viable but it doesn't help agribusiness.
WRIGHTYou know, there's all sorts of ways in which this is enhancing people's capacity to make life choices, Irrespective of whether they are currently poor or not.
NNAMDIHere's Ken in Gaithersburg, Md. Ken, you're on the air. Go ahead, please.
KENYeah, I'm probably going to sound like an old fart but the reason we're having this conversation is because what used to be considered a social contract was driven into the ground by rightwing Republicans and libertarians under the Reagan Administration and subsequently. At one time, you know...
NNAMDIBut wait a minute, this conversation, as we pointed out earlier and the clip indicated, was a conversation that was being had in the Nixon Administration with Milton Friedman and William Buckley long before Reagan even came to office.
KENThis is true. And I was about to say that under both Roosevelt and Johnson, there was the concept that nobody should be allowed to fall below a certain degree of income or disparity in terms of their access to food, shelter, housing and medical care. Nixon, for very good political reasons, sought to expand Medicare and some of the other social network and yes, this idea did come up and it vanished almost immediately.
KENBut later on during the Reagan Administration, the social network and the social safety net was ripped into shreds. And the reason why we're having this piecemeal conversation instead of looking at it in totality of what can we do as a society to ensure the basics for everyone, is because we are now politically so...
NNAMDIWell, I'm glad you raise that question because it seems to me that what we are talking about here is a system in which you can ensure the basics for everyone. But this idea, as our caller indicated, Dylan, seem to have disappeared from American politics after the 1970s. But it's been making a bit of a comeback in the media recently. Why is that and how realistic is it politically?
MATTHEWSI think the recession has enabled a lot of discussion of ideas that might've been -- seemed off the wall or utopian to come to the folds and conventional seeming solutions have seemed to fail us in a lot of ways. But I think the bigger sort of long term trend that I think will lead to some more discussion of this is that of automation and skill-based -- skill-biased technological change, that there are a number of economists -- and this is a controversial view and by no means that old science who believe that the current trend of technological change is sort of hollowing out middle class jobs and creating very menial, poorly enumerated jobs at the low end.
MATTHEWSAnd then, very sort of skilled-driven jobs at the high end and ultimately really redounding to the interest of capital and people who own sophisticated technology and can wield it. I don't know that that's going to result in a world in which demand for labor is low enough that there's a large stock of the American population that is permanently or persistently unemployed, but that might happen.
MATTHEWSAnd I think when we get to a world in which full employment is not just not achieved but not possible in which full employment in which people can have lives and livelihoods that are respectable without government intervention no longer seems possible as...
NNAMDIWe're running out of time. I do have to interrupt because Veronique De Rugy wants to make a point.
DE RUGYThank you, Kojo. I just wanted to go back to what your caller just said about Reagan. I mean, I don't think the safety net under Reagan was ever much under attack, if not just with words. I mean, we forget that Reagan was a gigantic proponent of social security. He shored it up with money that increased taxes. And so, I mean, I think it's wrong to say that, you know, the Republicans during that time was.
DE RUGYBut what we need to consider is, like, the current system is horrible. It doesn't serve people. We have, like, 126 programs according to Michael Tanner at CADO (sp?) . And they have several housing programs. And for poor people, people who are truly in need, even though I know when we talk about a basic income we talk about everyone, but the people who really need help are the poor people.
DE RUGYI mean, this is a path that they have flooded. It's a terrible...
NNAMDIYou see there's a system that's broken.
DE RUGYIt's a terrible system and we need to...
NNAMDIAnd this is a way to fix it. I'm afraid we're just about out of time, which is why I am interrupting. Veronique De Rugy is senior research fellow at the Mercatus Center at George Mason University. Obviously this is a conversation that we will be continuing. Thank you very much for joining us.
DE RUGYThank you.
NNAMDIDylan Matthews is a staff writer with Vox.com. Dylan, thank you for joining us.
MATTHEWSIt was a great time, thanks.
NNAMDIAnd Erik Olin Wright is a professor of sociology at the University of Wisconsin Madison. Erik, thank you for joining us.
NNAMDIAnd thank you all for listening. I'm Kojo Nnamdi.
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