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20170902 Basic Income

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MAIN IDEA:

The main idea of this book is to provide intellectual foundation and support for idea of assuring some basic minimal income as entitlement for everybody regardless of means, effort, overall abilities, and/or behavior of individual. In authors’ opinion such basic income is a central pillar of free society and its implementation would allow moving away from old socialist and neoliberalism ideas that were pretty much discredited in the past.

DETAILS:

Prologue

This is a brief description of the structure of the book and intention statement for each chapter.

  1. The Instrument of Freedom

Here authors present the central case for unconditional basic income. This case is based on dramatic change of the economic world, which became highly polarized between high skills / high earnings people and low skill/ low earnings people unable successfully compete neither with cheap foreign labor nor with robots. Authors believe that traditional methods of welfare state would not be enough to solve the problems of providing for low skill people because these methods designed as temporary help and include humiliation and stigma of not working. The most important features that authors stress in their schema are: universal character of basic payments for everybody regardless of anything, cash payments only, individual income, rather than family, and obligation-free nature of the income. Authors believe that it makes such income instrument of freedom.

  1. Basic Income and Its Cousins

This is a review of alternatives to basic income and reasons why authors believe these alternatives are inferior. The first alternative authors review is Basic Endowment, meaning allocation of some wealth level at birth or some specified age. The main objection to this is that some individuals would waste endowment and require help anyway. The second alternative is Negative Tax Income, which authors consider less efficient due to administrative requirements, but more politically feasible. The third alternative: Earned Income Tax Credit seems to be unacceptable to authors because it requires work. Even more critical authors are to Wage Subsidies and Guarantied Employment alternatives. The final alternative to basic income that authors review is French inspired Working Hours Reduction. They clearly consider it inferior because the variety of work demands when some labor is over and other undersupplied. Besides it would require lots of bureaucrats watching self-employed not to overwork.

  1. Prehistory: Public Assistance and Social Insurance

This chapter is a review of historical development of two currently dominant forms of social protection: public assistance and social insurance. The range of review here is from Thomas More with his Utopia to contemporary welfare state.

  1. History: From Utopian Dream to Worldwide Movement

This is a review of history of basic income idea from the end of eighteen century on. Since authors do not aspire for originality, they provide a very detailed history of Basic Income Idea starting with Thomas Paine vs. Tomas Spence polemic. Then they look at Marx’s Communist Manifesto and ideas of John Charlier who was the first to offer national level Basic Income. It follows by review of actual political debates about it in UK and America and partial implementation of the Idea in form of Alaska’s citizen dividend. The chapter ends with review of contemporary debates in Europe and attempts to implement Basic Income via referendums and/or other forms of political process that so far were unsuccessful.

  1. Ethically Justifiable? Free Riding Versus Fair Shares

This chapter is rejection of moral case against basic income and an attempt to provide ethical and philosophical justification for it. Obviously the first issue here would be free riding. Authors provide a number of reasons for rejecting this ethical accusation:

  • Fairness: Rich are not required to work for their income
  • Sexual analogy: people who do not produce children are not considered immoral so people who do not produce wealth should not be either.
  • Income without work would just redirect activities into areas that individuals enjoy and removed curse to produce what other people need.
  • Finally there is lots of activities that people do like domestic work that is not paid for

Consequently authors are trying to make ethical case that unearned income justified because it would provide freedom for all. This supported by discussion of various philosophical discussions from Rawls to such funny ideas as “Capitalist road to Communism”. At the end of the chapter authors provide graphic representation of dynamics of level of taxation under Basic Income system:

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6. Economically Sustainable? Funding, Experiments, and Transitions

This chapter is an attempt to develop economic case that basic income for all is feasible and authors propose some ideas of how to fund it. The first thing authors look at is the labor income, more specifically they look at disincentive that Basic Income would provide to individuals capable to work. Initially they are going into somewhat funny statistical exercise trying to prove that it is not necessarily the case by playing with Gross income vs. Net Income:

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After that they are looking at results of experiments with Basic Income and Negative tax in various countries, which were not very useful due to limitation in time, value of provided income, and temporary character. The other methods of obtaining financial support include nationalization of natural resources, gambling by others (Indian casinos), money printing, and such. They also discuss seemingly all conceivable variation of the notion of basic income from temporary to partial and various form taxation / confiscation that could be conceivably used.

7. Politically Achievable? Civil Society, Parties, and the Back Door

This is a review of political forces that could be used to support the idea or had to be overcome in order to implement it. So far public opinion in USA is strongly against just providing free income. It is higher in Europe, but it is still a minority who supports this. Authors look at Unions, Employers, and all other conceivable groupings from sex to political views and estimate level of potential support for such incentive and conclude that it real support is not feasible for Basic income provided in the form they discuss in this book. They put the hope on potential crisis and expect that even in this case they will have to start with partial basic income, masked with some conditions for receiving it, and keeping existing redistribution system mainly in place.

8. Viable in the Global Era? Multi-Level Basic Income

The final chapter is an attempt to apply the idea of basic income at the global level. Author looks at globalization as a process of pushing income down to the bottom in developed countries, consequently creating demand for a change. They add to the mix mass immigration and discuss EU as a transfer tool. They provide a nice little table demonstrating huge unfairness between developed and undeveloped world using carbon emission as a proxy for resource consumption:

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After that authors conclude that the only way is to create global multilevel basic income in order to adjust to existing variety in wealth.

Epilogue

Here authors briefly restate parameters of their case, admit that Unconditional Basic income is utopian idea, but claim that this idea in necessary and it has potential to free people from “dictatorship of the market”. They also put it in opposition to Hayek who wanted liberal (old meaning) utopia to oppose socialist utopia of his time. Interestingly enough the final word about achieving their utopia comes with reference to Machiavelli and need to push it via backdoor because they see no way to use honest dialog to bring humanity to their utopia via front door.

MY TAKE ON IT:

The Basic Income is becoming more and more popular idea and not only on the left. It is supported by Charles Murray and some other thinkers on the right who are concerned that with globalization, automation, and overall growth of demand to labor quality contemporary development leaves mass of unqualified and uneducated people outside in the cold, potentially creating foundation for instability of society. I agree that concern is real and important, but I think that the idea of unconditional Basic Income misses a very important point: we are dealing with human beings not just passive consumers of goods and services. Human beings if not seriously engaged in meaningful activities both physically and intellectually tend to deteriorate and could explode in riot even if they are well fed and provided. I think that much more reasonable solution would be equal rights for natural resources when individuals consuming more than average would buy this right from people who are consuming less than average via free market. In this case instead of passive reception of transfer people would be engaged in trading activities with various results, opportunity to improve skills, grow, and develop ambitions that would make them effective members of society. As to “dictatorship of market”, in my opinion only very miseducated people could seriously use this oxymoronic expression. The market by definition is voluntary exchange of goods and services and therefore could not possibly be “dictatorship”. The voluntary market exchange could be and often is unfair when the state deprive individual of any property so they had to agree to unfairness or starve, but even in this case it is the state, which is a culprit, not the market.


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