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Saturday, July 20, 2024

Universal basic income

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Universal_basic_income
In 2013, eight million 5-centime coins (one per inhabitant) were dumped on the Bundesplatz in Bern to support the 2016 Swiss referendum for a basic income (which was rejected 77%–23%).

Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive a minimum income in the form of an unconditional transfer payment, i.e., without a means test or need to work. In contrast a guaranteed minimum income is paid only to those who do not already receive an income that is enough to live on. A UBI would be received independently of any other income. If the level is sufficient to meet a person's basic needs (i.e., at or above the poverty line), it is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income. As of 2024, no country has implemented a full UBI system, but two countries—Mongolia and Iran—have had a partial UBI in the past. There have been numerous pilot projects, and the idea is discussed in many countries. Some have labelled UBI as utopian due to its historical origin.

There are several welfare arrangements that can be considered similar to basic income, although they are not unconditional. Many countries have a system of child benefit, which is essentially a basic income for guardians of children. A pension may be a basic income for retired persons. There are also quasi-basic income programs that are limited to certain population groups or time periods, like Bolsa Familia in Brazil, which is concentrated on the poor, or the Thamarat Program in Sudan, which was introduced by the transitional government to ease the effects of the economic crisis inherited from the Bashir regime. Likewise, the economic impact of the COVID-19 pandemic prompted some countries to send direct payments to its citizens. The Alaska Permanent Fund is a fund for all residents of the U.S. state of Alaska which averages $1,600 annually (in 2019 currency), and is sometimes described as the only example of a real basic income in practice. A negative income tax (NIT) can be viewed as a basic income for certain income groups in which citizens receive less and less money until this effect is reversed the more a person earns.

Critics claim that a basic income at an appropriate level for all citizens is not financially feasible, fear that the introduction of a basic income would lead to fewer people working, and/or consider it socially unjust that everyone should receive the same amount of money regardless of their individual need. Proponents say it is indeed financeable, arguing that such a system, instead of many individual means-tested social benefits, would eliminate much expensive social administration and bureaucratic efforts, and expect that unattractive jobs would have to be better paid and their working conditions improved because there would have to be an incentive to do them when already receiving an income, which would increase the willingness to work. Advocates also argue that a basic income is fair because it ensures that everyone has a sufficient financial basis to build on and less financial pressure, thus allowing people to find work that suits their interests and strengths.

Early examples of unconditional payments to citizens date back to antiquity, and the first proposals to introduce a regular unconditionally paid income for all citizens were developed and disseminated between the 16th and 18th centuries. After the Industrial Revolution, public awareness and support for the concept increased. At least since the mid-20th century, basic income has repeatedly been the subject of political debates. In the 21st century, several discussions are related to the debate about basic income, including those concerning the automation of large parts of the human workforce through artificial intelligence (AI), and associated questions regarding the future of the necessity of work. A key issue in these debates is whether automation and AI will significantly reduce the number of available jobs and whether a basic income could help prevent or alleviate such problems by allowing everyone to benefit from a society's wealth, as well as whether a UBI could be a stepping stone to a resource-based or post-scarcity economy.

History

Antiquity

In a 46 BC triumph, Roman general and dictator Julius Caesar gave each common Roman citizen 100 denarii. Following his assassination in 44 BC, Caesar's will left 300 sestertii (or 75 denarii) to each citizen.

Trajan, emperor of Rome from 98 to 117 AD, personally gave 650 denarii (equivalent to perhaps US$430 in 2023) to all common Roman citizens who applied.

16th century

In his Utopia (1516), English statesman and philosopher Thomas More depicts a society in which every person receives a guaranteed income. In this book, basic income is proposed as an answer to the statement "No penalty on earth will stop people from stealing, if it's their only way of getting food", stating:

instead of inflicting these horrible punishments, it would be far more to the point to provide everyone with some means of livelihood, so that nobody's under the frightful necessity of becoming first a thief, and then a corpse.

Spanish scholar Johannes Ludovicus Vives (1492–1540) proposed that the municipal government should be responsible for securing a subsistence minimum to all its residents "not on the grounds of justice but for the sake of a more effective exercise of morally required charity." Vives also argued that to qualify for poor relief, the recipient must "deserve the help he or she gets by proving his or her willingness to work."

18th century

English-born American philosopher Thomas Paine authored Common Sense (1776) and The American Crisis (1776–1783), the two most influential pamphlets at the start of the American Revolution. His essay, Agrarian Justice, was published in 1797, In it, he proposed concrete reforms to abolish poverty. In particular, he proposed a universal social insurance system comprising old-age pensions and disability support, and universal stakeholder grants for young adults, funded by a 10% inheritance tax focused on land, it is also considered one of the earliest proposals for a social security system. Thomas Paine summarized his view by stating that "Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds." Paine saw inheritance as being partly a common fund and wanted to supplement the citizen's dividend in a tax on inheritance transfers.

In 1797, English Radical Thomas Spence published The Rights of Infants in 1797 as a response to Thomas Paine's Agrarian Justice. In this essay Spence proposes the introduction of an unconditional basic income to all members of the community. Such allowance would be financed through the socialization of land and the benefits of the rents received by each municipality. A part of everyone's earnings would be seized by the State, and given to others.

19th century

Henry George proposed to create a pension and disability system, and a broad social support system from a single tax on land and natural resource value. Social support would be distributed to residents "as a right" instead of as charity. George mentioned, but did not stress, the possibility of direct cash distribution of land rent. His ideas gave rise to the economic philosophy now known as Georgism or the "single tax movement", which is an economic ideology holding that, although people should own the value they produce themselves, the economic rent derived from land—including from all natural resources, the commons, and urban locations—should belong equally to all members of society. Some Georgists refer to unconditional basic income funded by the single tax as a citizen's dividend in reference to Thomas Paine's proposal from the 19th Century.

Early 20th century

Around 1920, support for basic income started growing, primarily in England.

Bertrand Russell (1872–1970) argued for a new social model that combined the advantages of socialism and anarchism, and that basic income should be a vital component in that new society.

In the United Kingdom at the end of World War I, Dennis and Mabel Milner, a Quaker married couple of the Labour Party, published a short pamphlet entitled "Scheme for a State Bonus" (1918) that argued for the "introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom." They considered it a moral right for everyone to have the means to subsistence, and thus it should not be conditional on work or willingness to work.

C. H. Douglas was an engineer who became concerned that most British citizens could not afford to buy the goods that were produced, despite the rising productivity in British industry. His solution to this paradox was a new social system he called social credit, a combination of monetary reform and basic income.

In 1944 and 1945, the Beveridge Committee, led by the British economist William Beveridge, developed a proposal for a comprehensive new welfare system of social insurance, means-tested benefits, and unconditional allowances for children. Committee member Lady Rhys-Williams argued that the incomes for adults should be more like a basic income. She was also the first to develop the negative income tax model. Her son Sir Brandon Rhys-Williams proposed a basic income to a parliamentary committee in 1982, and soon after that in 1984, the Basic Income Research Group, now the Citizen's Basic Income Trust, began to conduct and disseminate research on basic income.

Late 20th century

Milton Friedman proposed the idea of a negative income tax (NIT), which effectively sanctioned a basic income for all, in his book Capitalism and Freedom published in 1962. In his 1964 State of the Union address, U.S. President Lyndon B. Johnson introduced legislation to fight the "war on poverty". Johnson believed in expanding the federal government's roles in education and health care as poverty reduction strategies. In this political climate, the idea of a guaranteed income for every American also took root. Notably, a document, signed by 1200 economists, called for a guaranteed income for every American. Six ambitious basic income experiments started up on the related concept of negative income tax. Succeeding President Richard Nixon explained its purpose as "to provide both a safety net for the poor and a financial incentive for welfare recipients to work." Congress eventually approved a guaranteed minimum income for the elderly and the disabled.

In the mid-1970s the main competitor to basic income and negative income tax, the Earned income tax credit (EITC), or its advocates, won over enough legislators for the US Congress to pass laws on that policy. In 1986, the Basic Income European Network, later renamed to Basic Income Earth Network (BIEN), was founded, with academic conferences every second year. Other advocates included the green political movement, as well as activists and some groups of unemployed people.

In the latter part of the 20th century, discussions were held around automatization and jobless growth, the possibility of combining economic growth with ecologically sustainable development, and how to reform the welfare state bureaucracy. Basic income was interwoven in these and many other debates. During the BIEN academic conferences, there were papers about basic income from a wide variety of perspectives, including economics, sociology, and human rights approaches.

21st century

In recent years the idea has come to the forefront more than before. The Swiss referendum about basic income in Switzerland 2016 was covered in media worldwide, despite its rejection. Famous business people like Elon Musk, Pierre Omidyar, and Andrew Yang have lent their support, as have high-profile politicians like Jeremy Corbyn and Tulsi Gabbard. The Institute for Public Policy Research predicted that 59% of tasks currently done by humans could be affected by AI in the next three to five years. Universal basic Income could help fill the gap left by this "jobs apocalypse."

In 2019, in California, then-Stockton Mayor Michael Tubbs initiated an 18-month pilot program of guaranteed income for 125 residents as part of the privately funded S.E.E.D. project there.

In the 2020 Democratic Party primaries, political newcomer Andrew Yang touted basic income as his core policy. His policy, referred to as a "Freedom Dividend", would have provided adult American citizens US$1,000 a month independent of employment status.

On 21 January 2021, in California, the two-year donor-funded Compton Pledge began distributing monthly guaranteed income payments to a "pre-verified" pool of low-income residents, in a program gauged for a maximum of 800 recipients, at which point it will be one of the larger among 25 U.S. cities exploring this approach to community economics.

Beginning in December 2021, Tacoma, Washington, piloted "Growing Resilience in Tacoma" (GRIT), a guaranteed income initiative that provides $500 a month to 110 families. GRIT is part of the University of Pennsylvania's Center for Guaranteed Income Research larger study. A report on the results of the GRIT experiment will be published in 2024.

Response to COVID-19

As a response to the COVID-19 pandemic and related economic impact, universal basic income and similar proposals such as helicopter money and cash transfers were increasingly discussed across the world. Most countries implemented forms of partial unemployment schemes, which effectively subsidized workers' incomes without a work requirement. Around ninety countries and regions including the United States, Spain, Hong Kong, and Japan introduced temporary direct cash transfer programs to their citizens.

In Europe, a petition calling for an "emergency basic income" gathered more than 200,000 signatures, and polls suggested widespread support in public opinion for it. Unlike the various stimulus packages of the US administration, the EU's stimulus plans did not include any form of income-support policies.

Basic income vs negative income tax

Two ways of looking at basic income when combined with a flat income tax, both of which result in the same net income (orange line): 1. (red) stipend with conventional tax for income above the stipend. 2. (blue) negative tax for low-income people and conventional tax for high-income people.

The diagram shows a basic income/negative tax system combined with flat income tax (the same percentage in tax for every income level).

Y is here the pre-tax salary given by the employer and y' is the net income.

Negative income tax

For low earnings, there is no income tax in the negative income tax system. They receive money, in the form of a negative income tax, but they do not pay any tax. Then, as their labour income increases, this benefit, this money from the state, gradually decreases. That decrease is to be seen as a mechanism for the poor, instead of the poor paying tax.

Basic income

That is, however, not the case in the corresponding basic income system in the diagram. There everyone typically pays income taxes. But on the other hand, everyone also gets the same amount of basic income.

But the net income is the same

But, as the orange line in the diagram shows, the net income is anyway the same. No matter how much or how little one earns, the amount of money one gets in one's pocket is the same, regardless of which of these two systems are used.

Basic income and negative income tax are generally seen to be similar in economic net effects, but there are some differences:

Philippe Van Parijs in his library
  • Psychological. Philip Harvey accepts that "both systems would have the same redistributive effect and tax earned income at the same marginal rate" but does not agree that "the two systems would be perceived by taxpayers as costing the same".
  • Tax profile. Tony Atkinson made a distinction based on whether the tax profile was flat (for basic income) or variable (for NIT).
  • Timing. Philippe Van Parijs states that "the economic equivalence between the two programs should not hide the fact that they have different effects on recipients because of the different timing of payments: ex-ante in Basic Income, ex-post in Negative Income Tax".

Perspectives and arguments

Automation

There is a prevailing opinion that we are in an era of technological unemployment – that technology is increasingly making skilled workers obsolete.

Prof. Mark MacCarthy (2014)

One central rationale for basic income is the belief that automation and robotisation could result in technological unemployment, leading to a world with fewer paid jobs. A key question in this context is whether a basic income could help prevent or alleviate such problems by allowing everyone to benefit from a society's wealth, as well as whether a UBI could be a stepping stone to a resource-based or post-scarcity economy.

U.S. presidential candidate and nonprofit founder Andrew Yang has stated that automation caused the loss of 4 million manufacturing jobs and advocated for a UBI (which he calls a Freedom Dividend) of $1,000/month rather than worker retraining programs. Yang has stated that he is heavily influenced by Martin Ford. Ford, in his turn, believes that the emerging technologies will fail to deliver a lot of employment; on the contrary, because the new industries will "rarely, if ever, be highly labor-intensive". Similar ideas have been debated many times before in history—that "the machines will take the jobs"—so the argument is not new. But what is quite new is the existence of several academic studies that do indeed forecast a future with substantially less employment, in the decades to come. Additionally, President Barack Obama has stated that he believes that the growth of artificial intelligence will lead to an increased discussion around the idea of "unconditional free money for everyone".

Economics and costs

Some proponents of UBI have argued that basic income could increase economic growth because it would sustain people while they invest in education to get higher-skilled and well-paid jobs. However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth.

Advocates contend that the guaranteed financial security of a UBI will increase the population's willingness to take risks, which would create a culture of inventiveness and strengthen the entrepreneurial spirit.

The cost of a basic income is one of the biggest questions in the public debate as well as in the research and depends on many things. It first and foremost depends on the level of the basic income as such, and it also depends on many technical points regarding exactly how it is constructed.

While opponents claim that a basic income at an adequate level for all citizens cannot be financed, their supporters propose that it could indeed be financed, with some advocating a strong redistribution and restructuring of bureaucracy and administration for this purpose.

According to statements of American Enterprise Institute-affiliated Libertarian/conservative scholar Charles Murray, recalled and sanctioned in 2016 by the George Gibbs Chair in Political Economy and Senior Research Fellow at the Mercatus Center at George Mason University and nationally syndicated columnist Veronique de Rugy, as of 2014, the annual cost of a UBI in the US would have been about $200 billion cheaper than the US system put in place at that date. By 2020, it would have been nearly a trillion dollars cheaper.

American economist Karl Widerquist argues that simply multiplying the amount of the grant by the population would be a naive calculation, as this is the gross costs of UBI and does not take into account that UBI is a system where people pay taxes on a regular basis and receive the grant at the same time.

According to Swiss economist Thomas Straubhaar, the concept of UBI is basically financeable without any problems. He describes it as "at its core, nothing more than a fundamental tax reform" that "bundles all social policy measures into a single instrument, the basic income paid out unconditionally." He also considers a universal basic income to be socially just, arguing, although all citizens would receive the same amount in the form of the basic income at the beginning of the month, the rich would have lost significantly more money through taxes at the end of the month than they would have received through the basic income, while the opposite is the case for poorer people, similar to the concept of a negative income tax.

Inflation of labor and rental costs

One of the most common arguments against UBI stems from the upward pressure on prices, in particular for labor and housing rents, which would likely cause inflation. Public policy choices such as rent controls or land value taxation would likely affect the inflationary potential of universal basic income.

Work

Many critics of basic income argue that people, in general, will work less, which in turn means less tax revenue and less money for the state and local governments. Although it is difficult to know for sure what will happen if a whole country introduces basic income, there are nevertheless some studies who have attempted to look at this question:

  • In negative income tax experiments in the United States in 1970 there was a five percent decline in the hours worked. The work reduction was largest for second earners in two-earner households and weakest for primary earners. The reduction in hours was higher when the benefit was higher.
  • In the Mincome experiment in rural Dauphin, Manitoba, also in the 1970s, there were slight reductions in hours worked during the experiment. However, the only two groups who worked significantly less were new mothers, and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling.
  • A study from 2017 showed no evidence that people worked less because of the Iranian subsidy reform (a basic income reform).

Regarding the question of basic income vs jobs, there is also the aspect of so-called welfare traps. Proponents of basic income often argue that with a basic income, unattractive jobs would necessarily have to be better paid and their working conditions improved, so that people still do them without need, reducing these traps.

Philosophy and morality

By definition, universal basic income does not make a distinction between "deserving" and "undeserving" individuals when making payments. Opponents argue that this lack of discrimination is unfair: "Those who genuinely choose idleness or unproductive activities cannot expect those who have committed to doing productive work to subsidize their livelihood. Responsibility is central to fairness."

Proponents usually view UBI as a fundamental human right that enables an adequate standard of living which every citizen should have access to in modern society. It would be a kind of foundation guaranteed for everyone, on which one could build and never fall below that subsistence level.

It is also argued that this lack of discrimination between those who supposedly deserve it and those who do not is a way to reduce social stigma.

In addition, proponents of UBI may argue that the "deserving" and "undeserving" categories are a superficial classification, as people who are not in regular gainful employment also contribute to society, e.g. by raising children, caring for people, or doing other value-creating activities which are not institutionalized. UBI would provide a balance here and thus overcomes a concept of work that is reduced to pure gainful employment and disregards sideline activities too much.

Health and poverty

The first comprehensive systematic review of the health impact of basic income (or rather unconditional cash transfers in general) in low- and middle-income countries, a study that included 21 studies of which 16 were randomized controlled trials, found a clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers, according to the study, may also improve food security and dietary diversity. Children in recipient families are also more likely to attend school and the cash transfers may increase money spent on health care. A 2022 update of this landmark review confirmed these findings based on a grown body of evidence (35 studies, the majority being large randomized controlled trials) and additionally found sufficient evidence that unconditional cash transfers also reduce the likelihood of living in extreme poverty.

The Canadian Medical Association passed a motion in 2015 in clear support of basic income and for basic income trials in Canada.

Advocates

Pilot programs and experiments

Omitara, one of the two poor villages in Namibia where a local basic income was tested in 2008–2009

Since the 1960s, but in particular, since the late 2000s, several pilot programs and experiments on basic income have been conducted. Some examples include:

1960s−1970s

  • Experiments with negative income tax in the United States and Canada in the 1960s and 1970s.
  • The province of Manitoba, Canada experimented with Mincome, a basic guaranteed income, in the 1970s. In the town of Dauphin, Manitoba, labor only decreased by 13%, much less than expected. This program was ended after issues with the cost becoming unsustainable started to arise.

2000−2009

  • The basic income grant in Namibia launched in 2008 and ended in 2009.
  • An independent pilot implemented in São Paulo, Brazil launched in 2009.

2010−2019

  • Basic income trials run in 2011–2012 in several villages in India, whose government has proposed a guaranteed basic income for all citizens. It was found that basic income in the region raised the education rate of young people by 25%.
  • Iran became the first country to introduce a system of UBI in December 2010. It was paid to all citizens and replaced the gasoline subsidies, electricity, and some food products, that the country applied for years to reduce inequalities and poverty. The sum corresponded in 2012 to approximately US$40 per person per month, US$480 per year for a single person, and US$2,300 for a family of five people.
  • In Spain, the ingreso mínimo vital, the income guarantee system, is an economic benefit guaranteed by the social security in Spain, but in 2016 was considered in need of reform.
  • In South Korea the Youth Allowance Program was started in 2016 in the City of Seongnam, which would give every 24-year-old citizen 250,000 won (~US$215) every quarter in the form of a "local currency" that could only be used in local businesses. This program was later expanded to the entire province of Gyeonggi in 2018.
  • The GiveDirectly experiment in a disadvantaged village of Nairobi, Kenya, benefitting over 20,000 people living in rural Kenya, is the longest-running basic income pilot as of November 2017, which is set to run for 12 years.
  • A project called Eight in a village in Fort Portal, Uganda, that a nonprofit organization launched in January 2017, which provides income for 56 adults and 88 children through mobile money.
  • A two-year pilot the Finnish government began in January 2017 which involved 2,000 subjects In April 2018, the Finnish government rejected a request for funds to extend and expand the program from Kela (Finland's social security agency).
  • An experiment in the city of Utrecht, Netherlands launched in early 2017, that is testing different rates of aid.
  • A three-year basic income pilot that the Ontario provincial government, Canada, launched in the cities of Hamilton, Thunder Bay and Lindsay in July 2017. Although called basic income, it was only made available to those with a low income and funding would be removed if they obtained employment, making it more related to the current welfare system than true basic income. The pilot project was canceled on 31 July 2018 by the newly elected Progressive Conservative government under Ontario Premier Doug Ford.
  • In Israel, in 2018 a non-profit initiative GoodDollar started with an objective to build a global economic framework for providing universal, sustainable, and scalable basic income through the new digital asset technology of blockchain. The non-profit aims to launch a peer-to-peer money transfer network in which money can be distributed to those most in need, regardless of their location, based on the principles of UBI. The project raised US$1 million from a financial company.
  • The Rythu Bandhu scheme is a welfare scheme started in the state of Telangana, India, in May 2018, aimed at helping farmers. Each farm owner receives 4,000 INR per acre twice a year for rabi and kharif harvests. To finance the program a budget allocation of 120 billion INR (US$1.55 Billion as of May 2022) was made in the 2018–2019 state budget.

2020−present

  • Swiss non-profit Social Income started paying out basic incomes in the form of mobile money in 2020 to people in need in Sierra Leone. Contributions finance the international initiative from people worldwide, who donate 1% of their monthly paychecks.
  • In May 2020, Spain introduced a minimum basic income, reaching about 2% of the population, in response to COVID-19 in order to "fight a spike in poverty due to the coronavirus pandemic". It was expected to cost state coffers three billion euros ($3.5 billion) a year."
  • In August 2020, a project in Germany started that gives a €1,200 monthly basic income in a lottery system to citizens who applied online. The crowdsourced project lasted three years and be compared against 1,380 people who do not receive basic income. When the project was finished in August 2023, Mein Grundeinkommen calculated that a tax-financed universal basic income of €1,200 per month could be financed for every adult in Germany that would make 80% of adults better off.
  • In October 2020, HudsonUP was launched in Hudson, New York, by The Spark of Hudson and Humanity Forward Foundation to give $500 monthly basic income to 25 residents. It will last five years and be compared against 50 people who are not receiving basic income.
  • In May 2021, the government of Wales, which has devolved powers in matters of Social Welfare within the UK, announced the trialling of a universal basic income scheme to "see whether the promises that basic income holds out are genuinely delivered". From July 2022 over 500 people leaving care in Wales were offered £1600 per month in a 3-year £20 million pilot scheme, to evaluate the effect on the lives of those involved in the hope of providing independence and security to people.
  • In July 2022, Chicago began a year-long guaranteed income program by sending $500 a month to 5,000 households for one year in a lottery system to citizens who applied online. A similar program was launched in late 2022 by Cook County, Illinois (which encompasses the entirety of Chicago as well as several suburbs) which sent monthly $500 payments to 3,250 residents with a household income at or below 250% of the federal poverty level for two years.
  • In June 2023, The Guardian reported that a universal basic income of £1,600 a month is to be trialled in two places in England – Jarrow and East Finchley.

Payments with similarities

Alaska Permanent Fund

The Permanent Fund of Alaska in the United States provides a kind of yearly basic income based on the oil and gas revenues of the state to nearly all state residents. More precisely the fund resembles a sovereign wealth fund, investing resource revenues into bonds, stocks, and other conservative investment options with the intent to generate renewable revenue for future generations. The fund has had a noticeable yet diminishing effect on reducing poverty among rural Alaska Indigenous people, notably in the elderly population. However, the payment is not high enough to cover basic expenses, averaging $1,600 annually per resident in 2019 currency (As of 2019 it has never exceeded $2,100), and is not a fixed, guaranteed amount. For these reasons, it is not always considered a basic income. However, some consider it to be the only example of a real basic income.

Wealth Partaking Scheme

Macau's Wealth Partaking Scheme provides some annual basic income to permanent residents, funded by revenues from the city's casinos. However, the amount disbursed is not sufficient to cover basic living expenses, so it is not considered a basic income.

Bolsa Família

Bolsa Família is a large social welfare program in Brazil that provides money to many low-income families in the country. The system is related to basic income, but has more conditions, like asking the recipients to keep their children in school until graduation. As of March 2020, the program covers 13.8 million families, and pays an average of $34 per month, in a country where the minimum wage is $190 per month.

Other welfare programs

  • Pension: A payment that in some countries is guaranteed to all citizens above a certain age. The difference from true basic income is that it is restricted to people over a certain age.
  • Child benefit: A program similar to pensions but restricted to parents of children, usually allocated based on the number of children.
  • Conditional cash transfer: A regular payment given to families, but only to the poor. It is usually dependent on basic conditions such as sending their children to school or having them vaccinated. Programs include Bolsa Família in Brazil and Programa Prospera in Mexico.
  • Guaranteed minimum income differs from a basic income in that it is restricted to those in search of work and possibly other restrictions, such as savings being below a certain level. Example programs are unemployment benefits in the UK, the revenu de solidarité active in France, and citizens' income in Italy.

Petitions, polls and referendums

  • 2008: An official petition for basic income was launched in Germany by Susanne Wiest. The petition was accepted, and Susanne Wiest was invited for a hearing at the German parliament's Commission of Petitions. After the hearing, the petition was closed as "unrealizable".
  • 2013–2014: A European Citizens' Initiative collected 280,000 signatures demanding that the European Commission study the concept of an unconditional basic income.
  • 2015: A citizen's initiative in Spain received 185,000 signatures, short of the required number to mandate that the Spanish parliament discuss the proposal.
  • 2016: The world's first universal basic income referendum in Switzerland on 5 June 2016 was rejected with a 76.9% majority. Also in 2016, a poll showed that 58% of the EU's population is aware of basic income, and 64% would vote in favour of the idea.
  • 2017: Politico/Morning Consult asked 1,994 Americans about their opinions on several political issues including national basic income; 43% either "strongly supported" or "somewhat supported" the idea.
  • 2018: The results of a poll by Gallup conducted last year between September and October were published. 48% of respondents supported universal basic income.
  • 2019: In November, an Austrian initiative received approximately 70,000 signatures but failed to reach the 100,000 signatures needed for a parliamentary discussion. The initiative was started by Peter Hofer. His proposal suggested a basic income sourced from a financial transaction tax, of €1,200, for every Austrian citizen.
  • 2020: A study by Oxford University found that 71% of Europeans are now in favour of basic income. The study was conducted in March, with 12,000 respondents and in 27 EU-member states and the UK. A YouGov poll likewise found a majority for universal basic income in United Kingdom and a poll by University of Chicago found that 51% of Americans aged 18–36 support a monthly basic income of $1,000. In the UK there was also a letter, signed by over 170 MPs and Lords from multiple political parties, calling on the government to introduce a universal basic income during the COVID-19 pandemic.
  • 2020: A Pew Research Center survey, conducted online in August 2020, of 11,000 U.S. adults found that a majority (54%) oppose the federal government providing a guaranteed income of $1,000 per month to all adults, while 45% support it.
  • 2020: In a poll by Hill-HarrisX, 55% of Americans voted in favour of UBI in August, up from 49% in September 2019 and 43% in February 2019.
  • 2020: The results of an online survey of 2,031 participants conducted in 2018 in Germany were published: 51% were either "very much in favor" or "in favor" of UBI being introduced.
  • 2020: An October survey of 1,026 Australians by YouGov found a 58% support for universal basic income.
  • 2021: A Change.org petition calling for monthly stimulus checks in the amount of $2,000 per adult and $1,000 per child for the remainder of the COVID-19 pandemic had received almost 3 million signatures.
  • Negative income tax

    From Wikipedia, the free encyclopedia
      Negative income tax
      Base pay

    In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money, as shown by the blue arrows in the diagram. NIT was proposed by Juliet Rhys-Williams while working on the Beveridge Report in the early 1940s and popularized by Milton Friedman in the 1960s as a system in which the state makes payments to the poor when their income falls below a threshold, while taxing them on income above that threshold. Together with Friedman, supporters of NIT also included James Tobin, Joseph A. Pechman, and Peter M. Mieszkowski, Jim Gray and even then-President Richard Nixon, who suggested implementation of modified NIT in his Family Assistance Plan. After the increase in popularity of NIT, an experiment sponsored by the US government was conducted between 1968 and 1982 on effects of NIT on labour supply, income, and substitution effects.

    Generic negative income tax

    The view that the state should supplement the income of the poor has a long history (see Universal basic income § History). Such payments are seen as benefits if they are limited to those who lack other income, or are conditional on specific needs (such as number of children), but are seen as negative taxes if they continue to be received as a supplement by workers who have income from other sources. The withdrawal of benefits when the recipient ceases to satisfy a firm eligibility criterion is often seen as giving rise to the welfare trap.

    The level of support provided to the poor by a negative tax is thought of as parametrically adjustable according to the opposing claims of economic efficiency and distributional justice. Friedman's NIT lacks this adjustability owing to the constraint that other benefits would be largely discontinued; hence a wage subsidy is more representative of generic negative income tax than is Friedman's specific Negative Income Tax.

    In 1975 the United States implemented a negative income tax for the working poor through the earned income tax credit. A 1995 survey found that 78% of American economists supported (with or without provisos) the incorporation of a negative income tax into the welfare system.

    Theoretical development

    Income redistribution expressed equivalently as a negative income tax or as a basic income

    Theoretical discussion of negative taxation began with Vilfredo Pareto, who first made a formal distinction between allocative efficiency (i.e. the market's ability to give people what they want subject to their incomes) and distributive justice (i.e. the question of whether these incomes are fair in the first place). He sought to show that market economies allocated resources optimally within the income distributions they give rise to, but accepted that there was nothing optimal about these distributions themselves. He concluded that if society wished to maximise wellbeing, it should let market forces govern production and exchange and then correct the result by 'a second distribution... performed in conformity with the workings of free competition'. His argument was that a direct transfer obtained a given redistributive effect with the least possible reduction of economic efficiency, and was preferable to government interference in the market (as happens in modern economies through the minimum wage) which damages efficiency by introducing distortions.

    Abram Bergson and Paul Samuelson (drawing on earlier work by Oscar Lange) gave a more formal statement to Pareto's claims. They showed that the optimum of efficiency associated with market competition fell short of maximum wellbeing as reflected by a social welfare function only through distributional effects, and that a true optimum could be obtained if the state were to transfer income through 'lump sum taxes or bounties', where 'bounties' are negative taxes and 'lump sum' is Samuelson's term for a hypothetical redistribution with no distortionary consequences.

    Optimal taxation theory

    It follows from the Bergson/Samuelson analysis that any proposed measure (including the proposal to leave things as they are) can be assessed according to the balance it achieves between three factors: (i) the improvement in overall wellbeing from a more equitable distribution; (ii) the loss in economic efficiency due to the distortions introduced; and (iii) the administrative costs. The first of these cannot easily be equated to a sum of money; the last is unlikely to be a dominant factor. Hence redistribution should be pursued up to the point at which any further (non-monetary) benefits from a more equal distribution would be offset by the resulting monetary loss of economic efficiency.

    The Bergson/Samuelson theory was developed in a broadly utilitarian framework. A fourth factor could be added in the form of a moral claim derived from present ownership or legitimate earning. Considerable weight was placed on this during the Enlightenment but Hume and the Utilitarians rejected it. It is seldom mentioned nowadays but cannot be dismissed a priori as a relevant consideration.

    The theoretical study of the trade-off between equity and efficiency was initiated by James Mirrlees in 1971. Eytan Sheshinski summarised:

    In various examples calculated by Mirrlees, the optimal income-tax schedule appears to be approximately linear with a negative tax at low incomes.

    Friedman's NIT

    Rose and Milton Friedman

    "Negative Income Tax" became prominent in the United States as a result of advocacy by Milton and Rose Friedman, who first put forward a concrete proposal in 1962 in a brief section of their book Capitalism and Freedom. Their system is equivalent in its operation to most forms of universal basic income (UBI) (qv., particularly the section § Fundamental principles for the equivalence).

    In the aforementioned work, Friedman provides five benefits of the negative income tax. Firstly, Friedman argues that it provides cash which the individual sees as the best possible way of support. Secondly, it targets poverty directly through income rather than through general old-age benefits or farm programs. Thirdly, negative income tax could in his opinion replace all supporting programs present at that time and provide one universal program. Fourthly, in theory the cost of negative income tax can be lower than the cost of existing programs mainly due to lower administrative costs. Lastly, the program should not distort the market in the way minimum wage laws or tariffs do.

    Friedman envisioned the NIT followingly in an interview in 1968: Considering family A of four with income $4000 and Family B of four with income $2000. If the break-even income would be $3000, after filing the tax report, family A would pay the tax on $1000 while family B would be entitled to receive, assuming the 50% NIT rate, $500. Meaning half of the difference between what they earn and the break-even income. Therefore, a family with $0 income would be entitled to receive $1500 in subsidy. Friedman argued NIT would not destroy the incentive to work, as compared to guaranteed income programmes (GIP) with 100% effective marginal tax rate, i.e. with the GIP workers lose $1 of subsidy for each $1 increase in wage.

    In his 1966 "View from the Right" paper Milton Friedman remarked that his proposal...

    has been greeted with considerable (though far from unanimous) enthusiasm on the left and with considerable (though again far from unanimous) hostility on the right. Yet, in my opinion, the negative income tax is more compatible with the philosophy and aims of the proponents of limited government and maximum individual freedom than with the philosophy and aims of the proponents of the welfare state and greater government control of the economy.

    Friedman also elaborated and provided two reasons for the hostility from the right. Firstly, he mentions that the right is frightened due to the introduction of a guaranteed minimum income the poor would have a disincentive to improve their well-being. Secondly, the right is not certain about the political outcomes of the NIT, as there exist threats that there will be an upward pressure on the break-even incomes among politicians.

    The Friedmans together promoted the idea to a wider audience in 1980 in their book and television series Free to Choose. It has often been discussed (and endorsed) by economists but never fully implemented. Advantages claimed for it include:

    • Alleviating poverty
    • Eliminating the "welfare trap"
    • Streamlining the benefits system.

    The alleviation of poverty was mentioned in Capitalism and Freedom, where Friedman argued that in 1961 the US government spent around 33 billion on welfare payments e.g. old age assistance, social security benefit payments, public housing, etc. excluding mainly veterans' benefits and other allowances. Friedman recalculated the spending between 57 million consumers in 1961 and came to the conclusion that it would have financed 6000 dollars per consumer to the poorest 10% or 3000 dollars to the poorest 20%. Friedman also found out that a program raising incomes of the poorest 20% to the lowest income of the rest would cost the US government less than half of the amount spent in 1961.

    The Friedmans' writings were influential for a period with the American political right, and in 1969 President Richard Nixon proposed a Family Assistance Program which had points in common with UBI. Milton Friedman originally supported Nixon's proposal but eventually testified against it on account of its perverse labor incentive effects. Friedman was mainly opposed to the idea that Nixon's program would be combined with existing programs at that time, rather than replacing the existing programs as Friedman originally proposed.

    Meanwhile, support for negative income tax was increasing among the political left. Paul Samuelson argued in Newsweek that it was an idea whose time had come, and more than 1,200 academic economists signed a petition in support of it. Friedman withheld his signature, possibly on the grounds that the petition didn't explicitly describe the new measure as a replacement rather than a supplement to existing programs.

    As civic disorder diminished in the US, support for negative income tax waned among the American right. Instead the doctrine came to be particularly associated with the political left, generally under the name "basic income" or derivatives. It received further impetus in Europe with the founding of the Basic Income Earth Network (BIEN) in 1986. Asked in 2000 how he viewed a basic income "compared to the alternative of a negative income tax", Friedman replied that the measures were not alternatives and that basic income was "simply another way to introduce a negative income tax", giving a numerical example of their equivalence.

    Experiments on the effect of NIT on the labour supply

    The experiments on NIT have been conducted in the US between years 1968 and 1982 and the expenditures were 225 million recalculated for the 1984 value. The first results have been that the husbands reduced labour supply by about the equivalent of two weeks of full-time employment. On the other hand, wives and single female heads reduced it by three weeks and the youth reduced the labour supply by four weeks.

    The experiments were conducted in the following states:

    • New Jersey (1968–1972) observing 1,357 families for a period of 3 years and testing the guarantee levels from 0.5 to 1.25 of the poverty line and tax rates from 0.3 to 0.7.
    • Rural Iowa and Carolina (1969–1973) involving 809 families for a period of 3 years and testing guarantee levels from 0.5 to 1.00 and tax rates from 0.3 to 0.7.
    • Gary (1971–1974) observing 1,780 families for a period of 3 years and testing guarantee levels from 0.75 to 1.00 and tax rates from 0.4 to 0.6.
    • Seattle–Denver (1971–1982) the biggest of the four experiments, containing three lengths of treatments (3, 5 and 10 years) and testing guarantee levels from 0.95 to 1.40 and a non-constant tax rate.

    It has been concluded that the most relevant sample size is from the Seattle-Denver experiment, and the experiment should yield the most precise estimates. Importantly, the results may vary not only due to sample sizes but also due to different design, methods of analysis or operations.

    Results of the individual experiments

    The individual results were districted into four categories: husbands, wives, single female heads, the youth. Firstly, it was noted that there is an unambiguous decrease in labour supply as a result of NIT and that there exists a pattern among each of the groups. The results show that husbands are the least responsive to NIT in terms of withdrawal from labour force while the youth is the most responsive. Moreover, the percentage responses are from 5-25% equalling 1–5 weeks of full-time work. The employment rate ranges from 1 to 10%. It is however important to note that while on one hand the youth was the most responsive to NIT, on the other hand the decrease in labour supply was equalled by increase in school attendance. Moreover, the chances of completing school education also rose notably in New Jersey by 5% and in Seattle-Denver by 11%.

    Considering results from the Seattle-Denver experiment, it can be shown that the two-parent families that received $2,700 decreased their earnings by almost $1,800. Therefore, spending $2,700 on transfers to two-parent families in Seattle-Denver increased their income by only $900. This raised the question whether taxpayers would be willing to pay $3 in order to increase the income of aforementioned families by $1.

    Implications to the real world

    An attempt was made to synthesise the results and provide a nation-wide estimate of the effects of NIT in the US using two plans, one with 75% and the other with 100% guarantee and 50% and 70% tax rates. The corresponding programmes would cost between 6.7 and 16.3 billion dollars, (-5.3) to 4.5 billion dollars, 55.5 to 61.1 billion dollars and 15.4 to 25.7 billion dollars (value expressed in 1985 dollars) respectively. These are net costs, meaning how much more the NIT would cost relative to the welfare programmes in effect at the time. For the latter two options, i.e. 100% guarantee with either 50% or 70% tax rate, it would represent an increase in spending equal to 1.5 percent of the gross national product (GNP) and 0.4-0.6 percent of GNP. The net increase could be financed by increase in federal taxes from 2 to 4 percent. While the cost of eliminating poverty seemed attainable, the issue of decreased earnings and self-support among families remained prevalent. Hence, the issues likely caused the decrease in interest in implementation of NIT, as the work of donor is a bit higher than the work of the recipient and can potentially lead to free riding which would destroy the entire framework.

    Comparison to universal basic income

    A negative income tax is structurally similar to a universal basic income, as both are capable of achieving the exact same net transfer of income. However, the two mechanisms may differ in the cost to the government, the timing of payments, and the psychological perceptions from taxpayers.

    Climate change ethics

    From Wikipedia, the free encyclopedia
    https://en.wikipedia.org/wiki/Climate_change_ethics

    Size corresponds to climate change vulnerability (determined by the University of Notre-Dame’s ND-Gain Index), with larger countries being more vulnerable. Color corresponds to total GHG emissions including land-use change (2011), with a darker shade indicating higher emissions.

    Climate change ethics is a field of study that explores the moral aspects of climate change. Climate change is often studied and addressed by scientists, economists, and policymakers in value neutral ways. However, philosophers such as Stephen M. Gardiner and the scientific authors of the Intergovernmental Panel on Climate Change (IPCC), argue that decisions related to climate change are moral issues and involve value judgment. Climate change involves difficult moral questions relating to global inequality and human development, who bears responsibility for past emissions, as well as the role of future generations, personal responsibility and many more.

    The two main ethical implications of climate change are related to its effects. The causes and effects of climate change are unrelated in time and space. Anthropogenic climate change is caused mainly by humans burning fossil fuels. The primary beneficiaries of fossil fuel burning are developed countries whereas the majority of climate impacts will be felt by the developing world. Further, climate change occurs on timescales much greater than a single generation of the human population, causing conflict between economic and political interests which are products of society and the interests of future people—an ethical and moral concept.

    Beginnings

    Climate change has become a concern for a number of disciplines due to its potentially catastrophic impacts on environmental systems, wildlife, nature, and humans. Climate change poses a serious threat to the global economy as economic development, especially in the West, has been largely dependent on the extraction and burning of fossil fuels since the Industrial Revolution. Burning fossil fuels increases the concentration of greenhouse gases in the atmosphere which is the primary driver of current global anthropogenic climate change. This notion has led to the study of the economics of climate change. Climate change is also a deeply political issue as there are disagreements among actors on whether and to what extent society should act on climate change. Economics is insufficient to guide policymaking alone, however, as it is only capable making predictions regarding how different policy decisions will affect the economy and how to proceed along those different pathways; it cannot tell us which pathway to choose, that is determined by which values we act on as a society. Because of this, some philosophers have argued that climate change is “fundamentally an ethical issue” which raises questions about "how we ought to live, what kinds of societies we want, and how we should relate to nature and other forms of life.”

    Global justice

    Climate change can be considered a global justice issue because the actors with the largest contribution to climate change are not the ones suffering from the most severe impacts. Historically, wealthy, developed nations have been emitting, and currently emit, disproportionally large amounts of greenhouse gases compared to poorer developing nations. For example, Bangladesh is highly vulnerable to the effects of climate change. The country's per capita emissions are 1/20th of the global average and 1/100th of the per capita emissions in the United States, but its low-lying topography makes it extremely vulnerable to sea level rise and cyclones—which are predicted to increase in frequency and intensity with climate change. Thus climate change can be seen as a global justice issue because the perpetrators of climate change impacts (developed nations) and the victims of those impacts (developing nations) are distinct actors.

    In addition to climate change being a global justice issue due to the disparities between the roles of developed and developing nations, the global justice issue can also be framed in terms of wealth. "Half the world’s carbon is emitted by the world’s richest 500 million people" meaning that regardless of where one lives, the higher their income, the higher their emissions. Although the United States has one of the highest per capita greenhouse gas emissions in the world, there are lower-income people in the U.S. with relatively lower emissions. Further, poorer people, regardless of where they live, are more likely to experience the effects of climate change because they have a reduced means to adapt compared to rich people.

    Intergenerational ethics

    Global warming—the progression from cooler historical temperatures (blue) to recent warmer temperatures (red)—is being experienced disproportionately by younger generations. With continued fossil fuel emissions, that trend that will continue.

    The intergenerational ethics of climate change addresses the responsibility of current generations to be environmentally conscious to and ensure the sustainable use of environmental resources can continue for future generations. Moral responsibility is a crucial consideration in intergenerational climate change ethics. This responsibility extends to various interests, including humans, animals, future people, and nature. The interests of the current generation must be weighed against those of future generations, balancing current needs against future aspirations.

    The effects of climate change are dispersed temporally and spatially. Ethical implications due to spatial dispersion are those discussed in the previous section on global justice: those causing the problem are not in the same physical space as those experiencing the worst of its effects. Temporal ethical implications mainly relate to the fact that current greenhouse gas emissions will affect future generations more than they will affect current people. This notion of pushing climate change impacts on future people poses epistemic difficulties, making it hard to grasp cause and effect, which could undermine motivation to respond. Institutional inadequacy further complicates the issue. Democratic political institutions have relatively short time horizons which are at odds with the timescale of global climate change. Politicians are concerned about voter support for the next election, on a scale of a few years, whereas climate change operates on much longer timescales of hundreds to thousands of years. Therefore, climate change gets put on the back burner of political agendas because it won’t help politicians win the next election cycle.

    Economics

    Economists propose prioritizing adaptation over mitigation due to high costs associated with mitigation; however, conventional economic analyses have philosophical limitations. Such analyses discount future generations and prioritize human interests, failing to consider all relevant costs and benefits of climate change mitigation. Henry Shrue argues that the "No Harm Principle" gives us reason for acting on climate change, despite the uncertainty of future impacts.

    Temporal discounting

    The concept of temporal discounting in economics is relevant to climate change ethics due to the temporal dispersion of its effects. Economists use discount rates to determine the value of future goods because it is assumed that the global economy will continue to grow and future people will have more goods than current people. The more goods you have, the less valuable any one good is, hence, it is discounted. Using different discount rates, economists can arrive at very different conclusions regarding how much of the global budget should be dedicated to climate change mitigation, adaptation, or other things. Prioritarianism offers one ethical justification for imploring a high discount rate is that because future people will be better off than we are today, benefiting people today is more valuable than benefiting future people. Utilitarianism on the other hand, favors a lower discount rate (or none) under the idea that benefits to future people are equally valuable as benefits to current people.

    Human rights

    Climate change is a pressing issue that threatens the basic human rights of individuals and communities around the world. Climate change violates several human rights, including the right to life, health, food, water, and shelter. Climate change exacerbates existing inequalities and disproportionately affects vulnerable populations, such as low-income communities, indigenous peoples, and small island developing states. Adopting a rights-based approach to climate change that recognizes the link between climate change and human rights would provide significant improvements.

    A moral threshold approach to climate change that identifies the minimum standards to protect human rights. This approach involves identifying a set of moral principles that establish the minimum standards of protection required to ensure that human rights are not violated by climate change. The moral threshold approach also involves identifying the duties and responsibilities of different actors in addressing climate change, including states, corporations, and individuals.

    States can take action to address climate change, as they are the primary sources of greenhouse gas emissions. States can take measures to reduce their emissions and contribute to the global effort to limit the increase in global temperatures. Additionally, corporations have a responsibility to reduce their emissions and contribute to sustainable development. Individuals can play a role by adopting sustainable lifestyles and advocating for policies that address climate change. It is also an open moral question whether or not acts of civil disobedience by individuals or groups aimed at raising awareness of the climate crisis can be justified.

    Climate change is a human rights issue that requires action. There is a high need for a rights-based approach to climate change and proposes a moral threshold framework for addressing this issue. By recognizing the link between climate change and human rights, people can work towards a more just and equitable future for all. It is the responsibility of all actors, including states, corporations, and individuals, to take action to address climate change and protect human rights.

    Archetype

    From Wikipedia, the free encyclopedia https://en.wikipedia.org/wiki/Archetype The concept of an archetyp...