Michael Howard, University of Maine
Originally published in the Bangor Daily News on March 4, 2014
I argued previously in a Feb. 4 BDN OpEd that unconditional cash transfers funded by a carbon tax could bring about substantial reductions in extreme poverty globally.
But what about the less-than-extreme poverty in developed countries? Is there a case to be made for unconditional cash transfers for them?
More than 100,000 Swiss citizens thought so when they signed a petition for a referendum, which will be held in the next year or two, on the question of whether every Swiss citizen should receive a guaranteed income of about $2,800 per month.
Its passage would be amazing, especially at such a high level. But a partial basic income at lower levels shouldn’t be a controversial idea; it already exists and is wildly popular in Alaska, where everyone gets a cash dividend of, on average, more than $1,000 per year.
What is remarkable is that a universal, unconditional basic income guarantee has so quickly become a topic of national debate in Switzerland and in other parts of Europe. Part of the reason is indignation at rising inequality, together with high unemployment, underemployment and poverty.
Globalization has made employment and income more precarious even at middle-income levels, with little likelihood of return to the days of life-long, full-time, well-paid employment with a single employer. A basic income guarantee is a way to protect against precariousness and enable people to survive and thrive with dignity as they move in and out of jobs, education and retraining, and care for children and elders (a form of work that is too often unrecognized and uncompensated).
Even those who never collect a payment, like homeowners who never collect from their homeowners’ insurance, benefit from the reduced risk of catastrophic loss of income.
Resistance to a basic income guarantee that is not conditional on behavior such as job searching is often based on the belief that such a guarantee will encourage dependence, laziness and having more babies. Consequently, the fear is that large numbers of people will receive undeserved cash, transferred from those who work.
Fortunately there is research that addresses these concerns. In the 1970s, there was intense interest in a guaranteed annual income, both in the U.S. and Canada, and experiments were conducted in several states and in Manitoba to measure what happens when people are given a basic income guarantee. The data show there is a very modest decline in hours worked, mostly by secondary wage earners such as mothers with newborns, and teenagers.
School attendance, child test scores and graduation rates improved, and hospitalizations due to accidents and injuries and mental health diagnoses declined. There was no measurable rise in births among income recipients.
Similar results were observed when North Carolina’s Eastern Band of Cherokee Indians began distributing casino revenue as cash payments to all members of the tribe. After five years, by which time the yearly profits per person amounted to $6,000, the number in poverty declined by half, youth crime and mental illness decreased, and high school graduation rates increased.
According to an OpEd by science writer Moises Velasquez-Manoff in The New York Times, “5 to 10 years after age 19, the savings incurred by the Cherokee income supplements surpass the initial costs — the payments to parents while the children were minors.”
This suggests an answer to those who see guaranteed income only in terms of its cost to taxpayers: Everyone benefits from having reduced crime and health care expenditures and more educated and productive citizens. And there seems not to have been a substantial work disincentive, even though the payments had risen by 2006 to $9,000 per person.
Still worried about unforeseen consequences of giving everyone $9,000 a year? Why not start smaller, and ratchet it up slowly?
Economics and politics writer Matt Bruenig, in an article co-authored with Elizabeth Stoker, has argued that we could cut poverty in half with a guaranteed income of just $3,000 per person per year. Whether we send it to everyone, or phase it out gradually as income rises from other sources, we avoid the dependency that comes from avoiding work for fear of losing the minimum income.
This is affordable with modest increases in taxes on the wealthy, administrative savings from not having to monitor whether recipients meet certain eligibility conditions, and the overall cost savings associated with reducing poverty. Will there be a few slackers who take advantage of the guarantee? Probably, but that’s a small price to pay for income security for all.
Michael Howard is a professor of philosophy at the University of Maine. He is the national coordinator of the Basic Income Guarantee Network, and a member of the Maine Regional Network, part of the Scholars Strategy Network, which brings together scholars across the country to address public challenges and their policy. Members’ columns appear every other week.