Even as a financial progressive, I initially read Annie Lowrey’s piece on the Swiss proposal for a minimum basic income with deep skepticism. Wouldn’t it send inflation skyrocketing? And what then would be the incentive to work if the government was handing everyone a check each week? No, I thought, a minimum basic income, or “mincome”, is simply a wonkish liberal pipe dream that could never get past a general election today. Heck, forget the liberal dream of a single payer health care system, the democrats are even running from
But the article stuck with me and in the days since reading it I found myself fantasizing (yeah, financial reforms really do occupy a large chunk of my fantasy life) all the ways a mincome could be good for the country. Here are three:
- The first thing I started fantasizing about was how I would use this extra income. And the answer was easy. I would use it to pay other people to do all of the chores in my life that I don’t want to do like laundry and cooking. Catherine Rampell wrote about the benefits of outsourcing a couple of weeks ago and that has also been on my mind lately. But if other people chose to use their money in the same way it could create a whole new category of home workers - entrepreneurs, stay at home parents, veterans, students, etc., who lack the time or ability to maintain a full time job but who could easily spend a few hours a week doing household work for their neighbors.
- Some employees would leave the work force and that’s a good thing. Employers would have to work harder to maintain workers knowing that their employees aren’t dependent on them to put food on their tables or pay their mortgages on time. And as demand for workers increases, employers would need to improve salaries and benefits to make jobs more attractive.
- More people will enter the spending class. Because of low job growth and stagnant earnings, a growing number of Americans are not putting money back into our economy - either because they have no income to spend, so little that they are just barely covering food and shelter or because they lack confidence in their future and are saving their money. We need citizens to be spenders to keep the circular nature of our economy flowing properly.
Annie Lowrey covers a few other pros, as well as some cons, of a minimum basic income, but one in particular bears repeating because of its appeal to both liberals and conservatives:
Such a system might work better and be fairer than the current patchwork of programs, including welfare, food stamps and housing vouchers. A single father with two jobs and two children would no longer have to worry about the hassle of visiting a bunch of offices to receive benefits. And giving him a single lump sum might help him use his federal dollars better. Housing vouchers have to be spent on housing, food stamps on food. Those dollars would be more valuable — both to the recipient and the economy at large — if they were fungible.
So what do you think, could you support a minimum basic income in America? What changes would you make in your life if you knew you had a guaranteed income from the government?
I think Basic Income is great, not least of which because it’s a top-up for those who are struggling, and unlike the EITC, doesn’t subsidize low-wage employers, thus delaying capital formation. The economics aside, let’s talk about the politics.
Here’s where I think the first step should be: If you eliminated the preferential rate treatment and the estate-exemption for capital gains and dividends, (and to find the extra $24 billion, adopt chained CPI if you can’t think of anything else, like say limiting mortgage interest deductibility to nearly a million instead of more than a million) you could put every American on SNAP at the full single person rate of $189 a month.
The short-term political upside is that it’s easy to sell the idea of help with the groceries at the expense of financial speculators. Republicans will look idiotic opposing it, because while they can rail against food stamps, it’s important to note that most people who decry irresponsible spending are decrying someone else’s irresponsible spending. They’re quite certain that their spending is responsible.
The policy case for why this benefit increase would act like a Basic Income in terms of relative fungibility is that for one, this would represent 4% of per capita income, 8% of median income, and depending on family size, at least 19% of the poverty line. This is significantly larger than both the Alaskan Basic Income financed by the Permanent Fund, and the Namibian BI test programme (both a little more than 2% of per capita GDP). Significant reductions in poverty and improvements in outcomes were found from both programmes, so it’s not like we need to get all the way there on the first step, so long as we’re sure not to dismantle income supports that exist until they’re replaced. For two, that rate represents the USDA’s maximum frugal-grade food budget for an adult, the bare minimum someone is expected to spend on groceries and be able to maintain adequate nutrition, so it’s not like many people are going to be forced to spend more as a consequence of this policy change.
Third is the long-term strategy: Once everyone’s got food stamps, and not just the putatively monolithic (and often not-so-normative) underclass, it’s not hard to convince middle-class Americans that everyone should get their SNAP payments in cash, “because hard-working Americans know best how to feed their families.” Or some such hypocritical bourgeois moralism. Now you’ve got a basic income. And it’s not hard to start increasing that by eliminating some programmes and tax expenditures. You can even use some of those poor-focused benefit cuts as leverage with the right. I’m sure you could convince a few Republicans to trade the EITC for a larger BI, once you’ve got it enacted.
So ultimately, my strategic advice on Basic Income is threefold:
1. Insist on indexation (or at least partial indexation) to per capita GDP. This is hard for Ryanites to oppose because it’s a government programme that will never grow as a percentage of the economy.
2. Don’t be afraid to get this piecemeal with a series of wedge-issues. For example: When you tell Americans that you’re coming for their mortgage interest deductibility, you can tell them that they don’t have to wait for tax day to get support with the mortgage payment. “Help that comes for every mortgage payment, not just after tax season.” Also, it’s not hard to point to people earning the median income, with a home that’s three-or-four times their income, and note that the BI increase would be bigger for them than their tax savings. Finally you can assail the idea of a tax break for someone’s yacht that qualifies as a second home, and other associated upper-middle-class ‘tax welfare queens’. Say tax in there, because people have an irrational hatred for the method by which we pay for civilization.
3. Don’t be afraid to make a policy change be regressive, so long as the poor are doing better than day one. A carbon tax, for example, is something we desperately need… but it’s also incredibly regressive. Don’t let the day be the enemy of the year.