A Modest Report

The House Budget Committee has released a report called The War on Poverty:  50 Years Later. Committee Chair Paul Ryan has a reputation as a serious policy "wonk".  The report reviews the research literature, yet seems to be rather wanting in honest scholarship.

Right off the bat, the report claims the poverty rate has only decreased 2.3 percent over 47 years (1965 to 2012) and yet a footnote adds that the poverty rate doesn't include government transfers to low income households.  Of course, the whole point of government transfers is to lower the poverty rate!

It's tiring to hear about how Republicans are concerned about the poor, even as their ideological goals end up slashing programs to help people.  They won't cut defense spending, they won't raise taxes, they claim to support Social Security and Medicare, and yet they somehow want a balanced budget.

Reconciling the ideological goals of the House Republican caucus with the best findings of social science is fundamentally impossible.

Update (March 7):  Paul Krugman counters the Republican argument that government aid perpetuates poverty.  The United States has less social mobility than other wealthy countries with more generous government aid.  Krugman says people can't get ahead when they lack access to good nutrition or health care or education.

The reason so many Americans remain trapped in poverty isn't that the government helps them too much; it's that it helps them too little. 

Update (March 10):  Karen Weese answers Paul Ryan and the Republican Party by injecting some compassion into the discussion about poverty.

Update (March 12):  Paul Ryan says poverty is a product of culture, particularly the culture of "inner cities".

Update (March 17):  Brian Beutler thinks that if Ryan isn't sounding a "dog-whistle", then it could mean conservatives have internalized an ideological framing that was designed to appeal to white racists.  An interview with University of Southern California professor Ange-Marie Hancock explains the dog-whistle.

Also, Jon Perr offers Kentucky as an example of how government action does effectively address poverty as opposed to the conservative notion of simply changing personal values.

Update (March 19):  Lynn Stuart Parramore writes about a guaranteed basic income as a way to relieve poverty and help the economy.  Maybe it would be better than minimum wage because then, if you want people to work in your crappy fast food restaurant, you'd actually have to make it worth their while.  And while we're at it, let's bring back the 90 percent top marginal income tax rate.

Update (March 22):  Sarah Jaffe and Alyssa Battistoni also write about the nature of work and the idea of a universal basic income.

Update (March 25):  Paul Buchheit reports that half of Americans own 1.1 percent of national wealth while earning less than twice the poverty threshold.

Update (March 26):  Robert Reich says a universal basic income is almost inevitable.  In the embedded video, Reich discusses Medicare for All and is asked about a negative income tax. Follow through links go to an article in The Atlantic about Social Security for All.  Someone ought to campaign on this.  Not only are these simple, popular ideas, the mechanisms are already there to implement it.  There is a cost, but politics is about setting priorities.

Update (December 8, 2015):  Finland is going to experiment with a universal basic income. One proposal is an 800 euro per month cash payment to all citizens that would replace all other government assistance.

Update (December 29, 2015):  The Brilliant Simplicity of a Guaranteed Minimum Income

A minimum basic income would allow us to dismantle vast bureaucracies that exist to police welfare recipients, and just cut everyone a check. And it would take a great deal of pressure off the movement to raise the minimum wage, because everyone’s income would have a floor already, meaning even low-paid workers would be less vulnerable to financial disaster. It’s a large-scale way to smooth out some of the inequality that plagues our nation. And it would allow fast food CEOs to stop bitching.

How would we pay for it? Partly by redirecting money we already spend, and partly by taxing the rich, like fast food CEOs, and by taxing corporations, like fast food corporations. Well. At least they could bitch about something novel.

Update (January 29, 2016):  The venture capital company Y Combinator wants to conduct a study on a guaranteed basic income.

Update (February 25, 2016):  Give everyone money.

Update (March 15, 2016):  Research suggests that giving money to poor people helps the economy more than subsidizing banks.

[T]he inequality diagnosis opens up interesting possibilities for policy solutions. The researchers found another interesting effect -- a “trickle up” flow of wealth quite different from the usual “trickle down” picture of supply-side economics. In an economy with appreciable inequality, capital tends to flow from those with less to those with more, generating a cascade of transactions along the way. Hence, policy interventions aiming to spur economic activity should work better if they inject money into the system at the lower end, rather than from the top.

Update (April 15, 2016):  An interview with author Rutger Bregman on a universal basic income.

Update (May 31, 2016):  Debate over a universal basic income.

Update (June 13, 2016):  Shannon Ikebe and Jesse Myerson debate universal basic income.

Update (June 20, 2016):  James Suroweicki explains the benefits of a universal basic income.

The U.B.I. is often framed as a tool for fighting poverty, but it would have other important benefits. By providing an income cushion, it would increase workers’ bargaining power, potentially driving up wages. It would make it easier for people to take risks with their job choices, and to invest in education. In the U.S. in the seventies, there were small-scale experiments with basic-income guarantees, and they showed that young people with a basic income were more likely to stay in school; in New Jersey, kids’ chances of graduating from high school increased by twenty-five per cent.

A basic income would not be cheap—depending on how the program was structured, it would likely cost at least twelve to thirteen per cent of G.D.P. And, given the state of American politics, that renders the U.B.I. politically impossible for the time being. Yet the most popular social-welfare programs in the U.S. all seemed utopian at first. Until the nineteen-twenties, no state in the union offered any kind of old-age pension; by 1935, we had Social Security. Guaranteed health care for seniors was attacked as unworkable and socialist; now Medicare is uncontroversial. If the U.B.I. comes to be seen as a kind of insurance against a radically changing job market, rather than simply as a handout, the politics around it will change. When this happens, it’s easy to imagine a basic income going overnight from completely improbable to totally necessary.

Update (June 21, 2016):  Jane Costello describes a "per cap" experiment involving The Eastern Band of Cherokee Indians in North Carolina.

Four years after the casino opened, Indian children had fewer behavioral and emotional problems than did neighboring children. Moreover, the effect continued into adulthood. At age 30, one in five of the American Indians had mental health or drug problems, compared with one in three of those in surrounding communities. The Indians had less depression, anxiety and alcohol dependence. The payments had no effect on extremely severe but rare mental illnesses like schizophrenia and bipolar disorder. But those who had received the supplement had better overall health and fewer economic problems. The younger the participants were when their families started getting the casino payments, the stronger the effects on adult mental health.

Update (August 22, 2016):  Gleb Tsipursky used to be skeptical of the concept of a basic income.

Getting a tire replaced seems easy to me. I’d just go to the nearest tire place and get it fixed. But Jayleene was living from paycheck to paycheck and didn’t have $110 to spare. She couldn’t get to work, and her boss fired her. She couldn’t make her rent and was soon out on the street — all because she needed $110 at the right time.

Hearing Jayleene’s story proved the clincher. I decided to bite the bullet, confess that my perspective was wrong and update my beliefs based on evidence.

Freed of these limiting beliefs, I realized that the notion of basic income has other benefits. First, it’s simpler to provide basic income than to fund many overlapping welfare agencies, and a country could save many billions of dollars by simply giving money to the poor. Second, basic income provides people more dignity and creates less hassle for them than the current system. Third, poor people like Jayleene are more aware than the government of what they truly need.

Update (April 2, 2017):  Sam Nakayama and Alexander Kolokotronis offer a socialist critique of a basic income.

While these qualities of basic income are ones worth aspiring to, the policy contains macroeconomic deficiencies if adopted universally. In addition, UBI advocates overlook one of the fundamental questions of power in political economy: Who controls the means of production? One way to address this question is through a self-managed socialist job guarantee. That is to say, providing a job to anyone who wants one, within a self-management institutional framework.

Update (June 22, 2017):  In an interview, Ha-Joon Chang warns against a certain version of basic income.

The right-wing version of UBI, supported by Friedrich von Hayek and Milton Friedman, the gurus of neoliberalism, is that the government should provide its citizens with a basic income at the subsistence level, while providing no (or little) further goods and services. As far as I can see, this is the version of UBI supported by the Silicon Valley companies. I am totally against this.

Update (December 28, 2017):  Bruce Lesnick argues that a universal basic income is not enough. "Jobs for all" is easily attained--with rising productivity, work hours can be cut with no reduction in pay.

[T]he rate of any UBI will necessarily be too low. There is a built-in imperative for a UBI to be small enough to encourage people to work. In order to induce people to work at all, the UBI has to be inadequate (or “barely adequate”) to live on by itself. But in the absence of guaranteed jobs for all, “encouraging people to work” means compelling them to compete for an insufficient number of low paying positions. When the supply of labor exceeds its demand in available jobs, wages are driven down, all other things being equal. And if the UBI is to be low enough to encourage people to work, it must ultimately follow wages downward. So, contrary to the assertion of UBI boosters that it would exert upward pressure on wages, a UBI without a job guarantee is just as likely to lead to a race to the bottom.

Update (February 14, 2018):  Anna Coote supports the thought that “an affordable [universal basic income] would be inadequate and an adequate UBI would be unaffordable”.

Far more compelling than UBI is UBS, or the idea of universal basic services currently being developed by economists at London University’s Global Prosperity Institute. Their goal is “public services that enable every citizen to live a larger life” by ensuring access to security, opportunity and participation. This means reaching beyond education services, to provide health, transport, access to information, shelter and food, free according to need at the point of access.

Their technical analysis found that access to services can be financed through fairly modest adjustments to the tax system. UBS will meet needs more directly for those with the lowest incomes and will “always deliver greater value for the same expenditure as a cash distribution.”

Update (March 3, 2018):  Valerie Vande Panne points out that a UBI is being pushed by the same people who are eliminating jobs through automation. UBI is not the same as a negative income tax and if other social programs were replaced by UBI, that would redistribute money from the poor to the well off.

The problem—besides the idea that we must change our very perception of meaning in life—is that the championing of UBI is so loud from Silicon Valley that it drowns out the nuances of conversation that must occur in order for any society to foster a healthy public policy. In fact, the feudal lords of Silicon Valley are actually pre-empting a meaningful societal conversation about the economic and social ramifications of UBI by setting and controlling the dialogue through their channels. The trickle-down theory, in this case, might just be working for the proliferation of an idea that is serving its biggest proponents more than the poor people it claims to be positioned to help.

Update (May 20, 2018):  Zach Carter profiles Stephanie Kelton and her ideas about modern monetary theory and a job guarantee.

Update (May 28, 2018):  Samuel Hammond and Ed Dolan are both skeptical about a federal job guarantee.

Update (July 6, 2018):  Laura Paddison explores how a federal jobs guarantee would work. But David Graeber is concerned about the expansion of bullshit jobs and argues for shorter work weeks and a UBI.

Update (August 5, 2018):  Catherine Mah discusses a decision to end Ontario's experiment with UBI.

The evidence to date is that a basic income guarantee can be an effective strategy to reduce food insecurity and improve health outcomes, saving public dollars. The evaluation of the Ontario pilot would have offered crucial evidence to help us further examine this promising strategy.

Update (August 28, 2018):  Matt Bruenig proposes a social wealth fund to be created by the U.S. government which would pay all adults (not on social security) a universal basic dividend. The plan is modeled on the Alaska Permanent Fund.

Update (October 21, 2018):  It's not UBI, but Senator Kamala Harris proposes to extend tax credits in the LIFT the Middle Class Act.

Update (December 11, 2018):  Ed Whitfield opposes UBI.

Guaranteed basic income is simply more widely available welfare. It would only help people have more access to consumption without altering anything about how production is organized. It would not alter wealth distribution and ownership. And it would require a new bureaucracy staffed by agents and experts to regulate and allocate this universal distribution of money.

I favor deep democracy replacing the rule of capital in our lives.

Update (January 16, 2019):  Valerie Vande Panne also questions the value of a universal basic income.

UBI as a solution to society’s topsy-turvy values in fact would further entrench society in capitalism, as it still requires people to continue to participate in and reinforce an unhealthy, money-driven system.

One could argue, then, that it’s not UBI that is needed, but a whole host of reforms when it comes to the things people need for survival and flourishing in our society, that they are now unable to do on their own because the system they are forced to live in requires they spend money they don’t have.

Update (February 8, 2019):  Laura Paddison describes experiments with Universal Basic Income.

The real benefits so far have come in terms of health and well being. The 2,000 [Finnish] participants were surveyed, along with a control group of 5,000. Compared with the control group, those taking part had "clearly fewer problems related to health, stress, mood and concentration," said Minna Ylikännö, senior researcher at Kela. Results also showed people had more trust in their future and their ability to influence it.

Update (October 12, 2019):  Stockton, California is giving 125 residents $500 per month for 18 months.

Researchers found that the biggest slice of the payouts (40%) was for food, 24% was spent on merchandise, including at places like Walmart and dollar stores, nearly 12% on utility bills and 9% on car-related expenses, such as fuel and repairs. Other money went toward insurance, medical expenses and recreation.

Update (October 20, 2019):  Bob Hennelly examines Andrew Yang's UBI proposal.

Update (December 3, 2020):  In an age of pandemic, UBI is gaining popularity.

COVID-19 has wiped away millions of jobs, many potentially permanently, and laid bare the brutality of an economic system where a person’s ability to access the fundamentals ― food, a home, medical care ― is dependent on having a job.

Update (March 15, 2021):  Sonali Kolhatkar describes an experiment in Stockton, California. 

People of color and women have been particularly demonized and cast as parasites taking advantage of the system. Poverty is seen as a moral failing, and therefore assistance is seen as an immoral reward for such a failing. According to [Sukhi] Samra, the Stockton study was criticized on the basis that giving people money would stop them from working. But so far it has proven the opposite: that a guaranteed income can actually help struggling Americans get jobs.