UBI and the Work Ethic
October 1, 2000
With Responses From
Oct 1, 2000
12 Min read time
It may be hard to find the political motivation to raise the funds.
General Motors is expecting sales approaching 150,000 per year for the Hummer, a four-seater vehicle of military origin that is more than seven feet wide, weighs more than seven thousand pounds, and scores extremely poorly on fuel efficiency and pollution criteria. Designed to scale vertical walls twenty-two inches high, its road clearance makes it liable to override the bumpers of a car in a collision, thus enabling its weight (about three times that of a car) to do maximum damage to the car’s occupants. And where does General Motors hope to sell these juggernauts? "You’ll see a lot in New York City, places like Manhattan where your affluent buyers are," the New York Timesquotes the general manager of Hummer operations as saying. "Paul Bellow, GM’s general director of market analysis, said that the rising concentration of wealth and income in America over the last two decades had been the most important social trend for automakers. A very large class of high- income, fairly youthful households had been created, he said, and these people care little about gasoline and other vehicle operating expenses"–or, presumably, the $93,000 price tag that General Motors is proposing to attach to the Hummer.1
What would be needed to make this kind of antisocial toy a commercial non-starter? Any solution must proceed in two directions. One is the taxation of income, wealth, and inheritance to offset the huge gains made at the top end of the distribution of income in the past twenty years, and the other is to bring the tax on gasoline at least up to Western European levels. These two measures are desirable in themselves. Moreover, backed up by other "green" taxes to cut energy use, they would generate so much revenue as to go much of the way towards answering the usual first question about any basic income proposal: "Where’s the money to come from?" The notion that the money raised should go to everybody equally could appeal to both right and left, the one because the money is not spent on government programs and the other because it helps most those with the least. This is not to deny, of course, that there are other places in the world in which a subsistence-level basic income for everybody (even by local standards of subsistence) could probably be achieved only by transfers from outside. I believe that a compelling moral case can be made out for the proposition that poor countries whose public administration is honest and competent enough to deliver a basic income should be helped to do so by rich countries in a systematic way. I shall, however, follow Van Parijs in focusing on the United States, with some side-glances at Western Europe.
It need hardly be said that it is one thing to identify where the money could come from and another to explain where the political motivation to raise it is to be found. A time of serious proposals to cut income taxes, abolish the inheritance tax, and even reduce the gas tax is less than propitious. We should bear in mind, however, that sometimes things move a lot faster and a lot further–and a lot sooner–than is generally expected. In politics, as in geology, seismic events resist prophecy. In a spirit of speculation, however, let me mention three conceivable ways in which a move to a universal basic income could be precipitated.
Imagine, then, some kind of really dramatic evidence of global warming–the disappearance of a medium-sized Pacific island under the sea, for example. This just might jolt public opinion into support for massive energy taxes. Returning the revenue to everybody equally would just by itself constitute a basic income at some level or other.
A second candidate is a revulsion against the "war on drugs," which currently incarcerates more people than are in jail from all causes in the European Union, which has a hundred million more inhabitants. Of course, the thought of the prisons being emptied and a lot of young or youngish unemployed (and maybe hard to employ) males returning home might well send shivers up some spines, but at the same time shutting down most of the prisons would make a great deal of money available. If we want to identify a forerunner to basic income in American politics, Richard Nixon’s Family Assistance Plan is, I suggest, more relevant than anything mentioned by Van Parijs in that it almost became law. Its architect, Daniel Patrick Moynihan, made no bones about the cynicism of its motivation: paying people not to work is cheaper than job-creation schemes, and buying off violence is cheaper than suppressing it. Both of these maxims retain their validity and could lead to a revival of interest in unconditional income support if concern for the stability of the inner cities resurfaced.
Finally, the inequality of income and wealth may become so great, with so much money in the hands of such a small proportion of the population, that the logic of electoral competition will impel the Democrats to play the redistribution card. That leaves open the question of the form redistribution might take, which is precisely why the pros and cons of basic income need to be argued during an unpromising period such as the present.
Asking about the pros and cons of basic income as such is rather like asking about the pros and cons of keeping a feline as a pet without distinguishing between a tiger and a tabby. Basic income has very different characteristics at different levels. Many of the advantages that Van Parijs claims for a basic income scheme would be realized only if it were pitched at subsistence level (or higher). Thus, for example, the uncertainty that inhibits people from moving from unemployment benefit (and, even more, disability benefit) would be allayed only if the unconditional alternative were enough to live on. Similarly, only a basic income at (or approaching) subsistence level would enable people to take time between jobs, get more training, or start a new business. Again, workers can refuse "desperation" jobs and women can leave abusive husbands only if the alternative income is adequate. The same goes for the possibility of engaging in full-time caring for children or for elderly or infirm relatives.
Despite this, the level of basic income actually plays no part in Van Parijs’s arguments for it. He says at one point that he "favor[s] the highest sustainable such income," and adds that in the richer countries this level exceeds a reasonable definition of subsistence. But there is really no way of guessing what the highest level of basic income would be in any country after all the changes in employment and taxation had settled down into an equilibrium. If Van Parijs is right, though, we have to ask about the pros and cons of a basic income at a level higher than "a reasonable definition of subsistence." These are different from those of either a basic income below or one at subsistence level. In the end, I will defend a subsistence level basic income, in preference to Van Parijs’s proposal.
Let me begin with the least demanding reform: introduction of a basic income at below subsistence level. If we are concerned about the "Malibu surfer" problem–the prospect of able-bodied people with employable skills choosing to live a life of self-indulgence, albeit at subsistence level–then maintaining the basic income below subsistence level solves it. Unfortunately, however, it yields only in an attenuated form at best the advantages offered by a subsistence-level income that I quoted from Van Parijs. Moreover, the entire apparatus of welfare benefits would still have to remain in place, though benefits would, of course, be reduced by the amount of the basic income. Even here, however, the news is not all bad: in Britain, for example, the eminent economist Tony Atkinson has calculated that even a basic income at a rate of half the standard state benefit would take millions of people off means-tested benefits, which are demoralizing, demeaning, and expensive to administer.
I have already listed a number of the advantages of a subsistence-level basic income. Moreover, its relation to the work ethic is not as one-sided as might appear at first blush. It is true that it reinstates the "Malibu surfer" problem. But at the same time it definitively abolishes the "poverty trap" that leads all traditional welfare systems down the path of coercion. The point of a basic income is that, in contrast to a conditional welfare benefit, it is not lost by taking a job. The result is that even very poorly-paid work makes you better off than not working. Moreover, contingent benefits criminalize a large proportion of the population for working while drawing benefit, even though they could not live on what this work brings in. The middle class in Britain is engaged in mass collusion with the officially unemployed to get houses cleaned, gardens dug, and children minded. And neither party to the transaction normally feels the slightest guilt–nor should they. There is surely something crazy about the stipulation that those drawing unemployment benefit must be "available for work" at any moment, which rules out their using the time to improve their qualifications, engage in community work, or help a neighbor while earning a bit extra. This is, in my view, the knock-down argument for basic income at subsistence level.
From this point of view, the Malibu surfers are a drawback, but one worth putting up with for the advantages that are inseparable from the unconditionality of a basic income. A superficially attractive way of getting at the surfers while maintaining many of the advantages of a subsistence-level basic income is Atkinson’s proposal of a "participation income." As one reviewer explains, "Atkinson defines participation to include: paid employment, self-employment, full-time education or training, intensive care work and approved forms of voluntary work."2 But this opens up a nightmarish scenario of an enormous bureaucracy entrusted with arbitrary monitoring powers. My guess is that something like "participation income" might be necessary politically to get a basic income introduced, but that the expense and intrusiveness of administering it (as well as its lending itself so easily to fraud) would lead either to abandoning the whole experiment or moving to an unconditional basic income.
All this presupposes, of course, that surfers really are a drawback. For Van Parijs, they are from a practical point of view, since the more of them there are the lower the sustainable unconditional income will be. Clearly, his surmise that in wealthy countries the maximum sustainable basic income would be well above any reasonable definition of subsistence level presupposes that the proportion of the population who could contribute significantly to the economy and choose not to would not be very large.
But what Van Parijs does not make altogether clear in his essay is that he rejects the idea that those who take a basic income (even one well above subsistence level) and do nothing for the community should be subject to reproach. As Van Parijs says at the start of his essay, he wishes to maintain that the highest possible unconditional basic income is an entitlement derived from a theory of justice conceived in terms of "real freedom for all." In the essay, he only hints at the nature of this theory, laid out in his book Real Freedom for All, and I cannot undertake to expound it in any detail here. I can say that by "real freedom" Van Parijs means (roughly) the ability to do what you want, and that his criterion of justice is that the freedom of those with the least real freedom is to be maximized. The means to real freedom so defined are resources, so (again, roughly) this means that the resources available to those with the least should be maximized. Those with the least are those who do nothing to generate any income for themselves by their own efforts. Hence, the size of the unconditional basic income is what should be maximized.
Why is this just? Van Parijs has several answers to this question. One is that it is unfair if those who are congenitally lazy have a smaller chance to get what they want than those who are more inclined to work. But we do not believe that people with antisocial traits (strong dispositions towards, say, rape or pedophilia) should have as much chance to fulfill their desires as others, and if the wish to live at others’ expense is an antisocial trait there is no reason for making special efforts to indulge it.
Another argument is that everybody living in a country is entitled to an equal share of "external assets," which underwrites a 100 percent rate of estate duty. Van Parijs then extends the notion of an "external asset" by calling on the theory of "efficiency wages," according to which it is profitable for employers to offer wages at above a market-clearing rate to induce employees to want to keep their jobs. As a result, there are always some people who could equally well do any given job and would be prepared to do it for less than those who hold the jobs are getting. On the basis of this, Van Parijs deduces that income tax rates should be set to produce the maximum possible yield: people who hold the well-paying jobs are beneficiaries of good fortune, and cannot object to having that good fortune taxed. Putting these two taxes together produces the revenue whose amplitude arouses such optimism in him.
The argument is unconvincing. It is hard to see why those who have no intention of engaging in paid employment should have any claim on the proceeds of a tax whose rationale is to offset the good fortune of those who have well-paid jobs at the expense of others who are just as qualified and would like to be doing them instead.
If I am right, then, the arguments that Van Parijs offers for the justice of maximizing the size of the basic income are defective. In their absence, I do not believe that there is any good case for pushing the demand for a basic income above the subsistence level. Of course, the notion of "subsistence" is still negotiable. It must be redefined for each society, so as to include the diet, amenities, and access to services that are widely thought to be necessary to "get along." It should also provide the material conditions for participating in the social and political life of the community. Something approaching a consensus has emerged in Western Europe that an income of half the median is, as a rule of thumb, what is needed to meet these criteria. Endorsing, then, the proposal for an unconditional basic income at subsistence level, let me conclude by offering that interpretation of it.
1 Keith Bradsher, "G.M. Has High Hopes for Vehicle Truly Meant for Road Warriors." New York Times, August 6, 2000.
2 Stuart White, "Review Article: Social Rights and the Social Contract—Political Theory and the New Welfare Politics," British Journal of Political Science 30 (2000): 507-32. I can heartily recommend this article, incidentally, for a discussion of a number of the issues surrounding basic income and its rivals. For "participation income" see Tony Atkinson, "The Case for Participation Income," Political Quarterly 67 (1996): 67-70.
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October 01, 2000
12 Min read time