Exploring the Potential of Basic Income in India, feat. Saksham Khosla

The Basic Income Podcast

00:00 / 27:21

The basic income conversation is alive and well in India, particularly in the wake of an analysis conducted by the The Indian Ministry of Finance’s 2016–17 Economic Survey. Saksham Khosla, a Research Analyst at Carnegie India in New Delhi, discusses the Ministry of Finance’s proposal, and the various issues to be tackled in considering a basic income program for India. Khosla describes the unique challenges of creating a social safety net for a country of over 1.3 billion people.

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Episode Transcript

Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.

Jim: And I’m Jim Pugh. We’ve talked briefly in the past about some of the past research around cash transfers, and there’s been a fair amount of studies on that and, in particular, some basic income pilots that have taken place in India in the past. And there’s recently actually been quite a growing debate in the country on the policy, but we really haven’t had a chance to delve in on that topic until now

Owen: So here to help us do that is someone who spent a lot of time with these issues in India. So joining us is Saksham Khosla. He’s a Research Analyst at Carnegie India. Welcome to the podcast.

Saksham: Thanks so much, guys. Thanks for having me.

Owen: So, to start with, can you just tell us generally about your work on universal basic income?

Saksham: Yeah, absolutely. So my research on UBI has really started in the aftermath of the Indian Ministry of Finance’s proposal for an Indian universal basic income that came out in 2016. That particular report seemed to have set a firestorm of debate in India about how does some radical transformation of the welfare net can be implemented in India.

So after that report, I really became interested in figuring out how apt really is such an intervention for the Indian context and what might one think about when something like this have to be implemented at the scale and size and scope that is India. That really was the rationale for getting into a, discussing a UBI for me.

Jim: Now, you’ve written that there is an active debate around basic income in India. Can you tell us a bit about, what is the driving interest there behind the idea? Is it, in the US, oftentimes automation is brought up as a reason for people to become interested, and there are people who explore it for other reasons here as well, looking at the anti-poverty and equity value that the policy might bring. But I’m curious if you can give us some insights as to what’s actually causing people to pursue this policy there.

Saksham: Absolutely. Like in the US, the universal basic income is the not really a new idea for India. In the late 60s, there were debates happening within the Indian cabinet about whether a minimum income standard would be a useful policy intervention.

That debate seems to have subsided since then, but it seems to have picked back up starting around 2011 and 2012 when a couple of Indian Economist started thinking about whether there is an argument to be made for administrative efficiency. And that really is the big driving rationale for an Indian UBI. Can it outperformed our existing social safety net, which is one that is incredibly expensive? It’s sort of a patchwork of programs that takes place across the country in for a variety of different populations. And the thinking is, well, can one cash transfer, something that suffices for a household and is enough to cover their basic need and that’s delivered directly into people’s bank account, can that really outperform some of the more complicated welfare arrangements that we have in this country?

And since then, that debate is really been picked up by lots of economists, scholars, researchers, activists, and that has finally culminated in the economic service report that came out a few years ago.

Owen: So we’ve spoken in recent episodes about the importance of understanding the context of a country’s social benefit system before we, you know, throw in a UBI. So if you could just help us understand India’s current anti-poverty programs and other social programs, that would be really helpful.

Saksham: Yeah. So the poverty alleviation strategy has really comprised three basic prongs. First off, obviously, economic growth. Second is public services like healthcare, education, sanitation and so forth. And the third, in which particularly the Indian state has invested heavily since the 2000s is social protection. And this involves transfers of varying kinds, subsidies. And these can broadly be broken down into two basic tents.

The first is obviously services that are rendered for individuals who are in the formula sector. So whether you’re a government employee, whether you’re employed by an organization, pays taxes, and has its employees on a formal payroll. But these, the formal sector really comprises a minority of India’s labor force. A little less than 10 percent of the entire working population falls within the formal sector. India welfare architecture really kicks in and comes to life for the remaining 90 percent of the workforce, those who are in informal organizations. They’re off the books, they’re self employed, they’re primarily involved in agriculture.

And here, the Indian state has a variety of programs. The first broadly are programs that are more or less transfers. These involve India’s flagship fuel, fertilizer, and food subsidies. There are India’s public works program called the Mahatma Gandhi National Rural Employment Guarantee Program, which is the world’s largest public works program. And then you have a series of insurance programs as well as the national social assistance program, which is basically a combination of pensions, which is given to the elderly, those who are disabled, widows, and so on and so forth.

So that is the broad generalization about India’s social safety net. Some of these, mostly, they are in-kind, but there are a few cash transfers in there as well.

Jim: Now, India currently has over 1.3 billion people living in the country. Can you talk about how does the massive size of the population affect how to country administers social benefit programs?

Saksham: That’s a really good question. I think the way the country has figured out how to administer the variety of programs is to essentially leave the central government in charge of the biggest and most expensive of these programs and then work alongside state government as well as local governments to decentralized some of those work and have them do a little bit of the heavy lifting. So while the funds may actually be coming from the central government, a lot of the day to day implementation is actually done by state governments with district administrations.

Now, of course, a lot of individuals fall through these cracks, just given the size and complexity of India, but that is the general thinking behind well, how does one go about addressing such a population?

Owen: So now getting into your analysis of the UBI proposal by the Indian Ministry of Finance’s economic survey: could you describe the proposal and also share your views on its, what you see as its shortcomings?

Saksham: The proposal, the big headline findings from the proposal are basically along the following lines. I definitely do recommend checking out the entire chapter in its entirety. But the big takeaways from the Ministry of Finance’s chapter was that a transfer of Rupees 7,000, which comes out to about 110 dollars annually, would bring down poverty from the existing poverty rate, about 22%, to a poverty rate of about 0.5%, if that transfer was given to 75 percent of India’s population.

So it’s important to know that this is not a fully universal transfer. The economic comes out and says that completely ensuring coverage of the entire population would be something that would be too fiscally costly, and possibly even politically costly as well. So it advocates for a 75% coverage rate, and it suggests various ways of excluding the remaining 25%, whether by targeting certain populations, rolling it out sequentially, possibly even targeting different geographies of the country and then taking it up to a larger scale.

The cost that the economic survey puts for such a transfer to a population of that size is about 5% of GDP. This is a fairly high, fairly costly estimate, and the survey comes out and says that this isn’t something that can be an add-on to existing programs. So all the programs that I talked about earlier like the public works program, the public distribution system, which is to ensure food security in the country, and a variety of other large welfare schemes would essentially have to be rolled back or dismantled to make place for a UBI, for a quasi-UBI as the survey calls it, of this magnitude.

So after looking at how the survey goes about putting together this estimate, and the implementation of a UBI, I had the following thought to evaluate this proposal. First of all, it is not really a universal basic income, obviously it’s for 75% of India, not the full population. So there is going to be targeting still retained as a big part of the program.

Now the service says that it wants to exclude the rich rather than target out, target the poor. But that still seems to me at least leaving the door open to a series of inefficient means-testing mechanism, or even other targeting techniques that may not work as easily in practice as they would in theory.

Looking into the various ways of calculating the transfer, the annual transfer of about $100 per year, it’s a fairly low payout because it’s based on a lower poverty line than alternative poverty lines that are available in India. And it’s not a true poverty line transfer as well. It’s essentially a cash transfer that is supposed to push people over the party line.

If you were to actually calculates the cost of giving folks in India a poverty line transfer, that would come to about 10 to 12 percent of GDP, rather than the 5% the survey puts forth. And that’s actually more than the entire central government’s revenue in the path. So we can see already that the the size and population of India is a big constraint on pulling off an ineffective UBI.

So the final part of the puzzle is, well, how do you actually send folks the transfer? The survey puts a lot of stock in India’s national biometric identification system, called Aadhaar. And the government’s push for universal financial inclusion. The survey actually comes and says that these two pieces are essential to have in place before one can think about having a universal transfer deposited directly into people’s bank account.

I completely agree with that estimate. I think it’s fairly early in our financial inclusion system to think about transmitting such a transfer effectively. There have been a series of evaluations by scholars, activists, and journalist of cash transfer experiment that are currently being undertaken in relatively urban parts of India where the food security program, the food that one would ordinary get down to the program, people are being given cash instead of that. A series of evaluations have found that for a variety of reasons, whether last mile delivery, the actual amount of the cash, the cost that people have to bear in receiving the transfer then going and spending it in the open market, actually have created significant concern for these populations. So in parts of the country where things like the PDF and other welfare schemes are function fairly effectively, the preference for cash transfers actually fairly low.

And we can see that the series of implementation problems the current government is facing with implementing cash transfer as indicative of just how far we have left to go before we can think about universal or even quasi- universal cash transfer across the country. So a UBI, for all it’s worth in theory, actually radically changes when one thinks about translating it into policy and action.

Jim: You mentioned challenges with “last mile” on this new cash transfer approach. Can you elaborate what those issues are?

Saksham: Yeah, absolutely. So the pilot evaluations of what are called “direct benefit transfers” have essentially found that, and these have been a series of evaluations that have been going on by organizations like JFL in coordination with the Food Ministry. And they’ve essentially found that the size of the subsidy, in particular, has not been enough for individuals getting the transfer to compensate for their typical consumption expenditure.

In addition, the combination of cash transfer with the biometric identification program has complicated things significantly. What that means is that when an individual goes to get this cash transfer, they must authenticate their fingerprints to receive that transfer, and their fingerprints are essentially recorded within the nation’s biometric identification program.

And across rural India, authentication failure are an incredibly big reason why people have been unable to receive their payments. That has resulted in massive exclusion errors where people who would have otherwise been able to receive their food rations, simply by demonstrating their ID card to the person actually giving out this grain, have been systematically denied their cash transfer. So authentication failures and exclusion errors that have resulted as a part of the Aadhaar program, just the biometric program, have been a significant obstacle in receiving this transfer.

Over and above that, actually going and spending this money in the open market has been something that incurs high private cost because one has to take out the time to actually go and receive the transfer, go and spend it out on the open market, because of all these reasons, there’s a lot of progress that needs to be made before large-scale Aadhaar-linked cash transfers can be actually trusted to fully reached recipients.

Owen: That’s very interesting. So universal basic income has a lot of principles embedded in it, such as universality and unconditionally. Even if a full UBI may or may not be right for India, what principles from the overall concept do you think would be useful in implementing and changing India’s social benefit programs?

Saksham: So I think something that has benefited several state governments, and even the central government in their implementation of existing welfare programs, and I’m thinking particularly of the public distribution system and security, has been to universalized coverage and reduce the number of eligibility criteria or bureaucratic hoops a beneficiary has to jump through to receive that transfer.

So several Southern and Central, even Eastern Indian states have found that when they implemented reforms that make it eash for a vast proportion of the beneficiary population to receive the transfer with relatively little bureaucratic middlemen, that actually has helped reduce leakage, reduce corruption, reduce the chance of transfers of being diverted from beneficiaries.

So a big reason why the administrative efficiency argument is made in favor of a UBI, that argument loses a certain part of its salience when one considers the progress that India’s existing welfare schemes have made to reform themselves just by implementing the principles of universality, and to a certain extent, unconditional as well. One thing that I actually think, and this is something several scholars in India has put forth, could be a stepping stone potentially to a UBI, is to universalize existing social pensions among folks that are elderly, the widows, and people who are disabled, because these are vulnerable populations. They’re easily identifiable, and a series of evaluations and studies over the past decade have found that this is a program that works particularly well relative to other schemes.

So if one were to universalize payments, and social pensions in particular, I think that would be a very useful way to combine the central tenet of UBI, which involves cash given to a universal population with as little bureaucratic intervention as possible.

Jim: So delving more into the politics around this: can you give us a sense for what is the current conversation around basic income and similar policies in India right now? Where does there seem to be momentum for actually pushing forward real change?

Saksham: I think the conversation for UBI, at least politically, seems to have hit a pretty significant roadblock immediately after the proposal was submitted by the Indian Chief Economic Advisor’s office. The chief, the country’s Finance Minister pretty much came out and said that the country’s finances cannot handle a UBI at this point in time and that it would be easy to implement, but very hard to roll back. So I think there is a fair amount of political doubt, I think, about the feasibility and the need for such a program at this point in time.

But I think that there is certain cause for optimism, if not from the central government, but from the state government. So several Indian states are actually contemplating whether it would be easier and more feasible to convert several of that existing benefits Into cash transfers, combine that cash transfer, and transmit that to their beneficiiaries.

Now, obviously, there are a couple of dangers here. One has to be careful that this isn’t a program that Happens only in India’s most effective states administratively, and states that, rather than states that actually need this sort of intervention. And that under the guise of a UBI, this isn’t an excuse to sort of step back from the state’s obligations to its citizens and convert programs that would be relatively high functioning into relatively meager cash transfers. I think that’s a big risk.

So I think the conversation right now, at least politically, on a UBI seems to be at a bit of a standstill. But I don’t think that that should be cause for pessimism. Several folks have recommended that coalition of workers unions, whether they are informal workers or workers in formal sector, could come together to agitate for a UBI. In fact, several of the UBI experiments in India have been conducted with the help of the Self Employed Women’s Association, which is a group of women running small businesses for whom this policy seems to have great potential. So I think that is where the political discussion is at.

It’s also hindered because we really don’t know what the final form of a UBI will be in India. The economic survey proposal is just that, it’s one proposal. But we don’t know whether a central state government would go about actually implementing it. Would it involve a higher amount of taxes? Would it involve actually dismantling existing schemes, in which a brave government would have to contend with the beneficiaries of that scheme, and therefore the political ire, as it were. So I think that’s where political discussion is at.

Owen: So, given the uncertainty both around the politics and also about what is the right way forward, what do you see as the next steps for basic income in India?

Saksham: Well, I think for both a UBI, folks that support UBI, and those that criticize the the applicability of such a program, the only way this discussion can move productively forward is, I think, through a state-administered basic income experiment. And I want to emphasize the part that this should be, something should be administered by a state government or a collection of state government, potentially even by the central government. Because rather than the discussion that’s happening in the US or in certain parts of Europe, the key constraint to implementing a basic income in India is state capacity, and whether the Indian state implements it in such a fashion that is more effective or can outperform existing schemes. The relative benefit or merits of the idea quickly lose any of their relevance if what we get in its place is a program that leaks, that has a high chance of encouraging corruption, and that may even come at the cost of schemes that do actually deliver their benefit to these citizens.

So I think a basic income trial, ideally something that is longer than five years to resist electoral pressure and to give us long-term cash transfer effect, is incredibly important for this debate. And if we can get this done with the participation of an external agency that has high amounts of experience evaluating large randomized control trials or other forms of welfare evaluations, that would be an ideal way to figure out, well, is this really something that fits neatly within the welfare contact and if it’s something that is worth investing resources, time, and even political will behind.

Jim: That was Saksham Khosla, a Research Analyst with Carnegie India.

Owen: So, I found it very interesting when he described the problems of implementation of cash transfers. It felt like the reverse, at least in the US and a lot of other countries, where usually if you’re delivering stuff or some kind of non-cash benefits, that’s much harder than delivering cash. There’s a lot of transfer issues, whereas cash is just instant and easy. Whereas, you know, as he described, that’s not really the case in India.

Jim: Yeah. I think this was a great example of understanding the key differences that will ultimately lead to different right solutions in different countries. And that recognizing that it seems like there, I mean he talked about leaks and corruption in the process. And so they have systems they’ve developed over time that are, at least it seems currently, somewhat resistant to that, and if you’re talking about something new, that “last mile” piece may actually be a huge challenge. And so whether you use cash instead of specific in-kind goods, any sort of new approach, and also the amount of security you need to include with it in order to try to prevent that, those all create additional barriers that you don’t necessarily think about at first blush.

Owen: Yeah, and like you said, I think it shows the importance of experiments and trials just because there’s always going to be something that you’re not thinking of when you actually lay it out. I feel like a lot of us advocates can kind of get frustrated because we feel like we know this works, that we should just do it, but you learn so much through all the trials that we’ve done and especially in a context that at least we’re not particularly familiar with.

Jim: And we talked about this in the episode earlier this year with Elizabeth Rhodes, but for the Y Combinator experiment, the first thing they did wasn’t to run the experiment. The first thing was to do a very small pilot just to understand logistics.

So even here in the US, people recognize that once you actually, once the rubber hits the road, and you’re actually talking about real programs, it’s so important that you really dig in and understand, what are the logistical challenges? How, are there ways that this may have unintended consequences or break down at points that we might not think about in a top-level economic analysis?

Owen: Yeah, and speaking of economic analyses, I always find it interesting what conditions people choose to set when they’re creating these analyses. You know, he described one where it’s 75% of the population, which it’s kind of daunting to think about how that remaining 25% is like the population of the United States. But, you know, that’s one way to do it.

We spoke to the team in Washington DC who looked at a basic income at the poverty level and 4 and 1/2 times the poverty level. And I just find it interesting the sorts of choices that people make when they’re modeling this out, and I feel like, you know, that’s something where it’s a lot cheaper to do an economic analysis, but we could still use a lot more of those to just get a feel for what different programs might look like.

Jim: Getting more movement on all fronts. The more, the better we understand this, the more informed and deep debates we can have, the better for moving things forward.

Owen: Yeah, absolutely. Thank you for listening to the Basic Income Podcast. Thank you to our producer Erick Davidson. Please subscribe on the podcast service of your choice and leave us a rating or review. And please tell your friends to bring more people into this conversation. See you next week.

Expanding the Earned Income Tax Credit, feat. the California Budget & Policy Center

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The Basic Income Podcast

Expanding the Earned Income Tax Credit, feat. the California Budget & Policy Center

00:00 / 31:20

While basic income is often described as a revolutionary proposal, we do have programs in the federal government and some U.S. states that contain elements of a basic income, namely the Earned Income Tax Credit (EITC). The California Budget & Policy Center (CBPC) has studied the effects of the EITC, and what it might look like to expand the program to something resembling a basic income. Jim and Owen are joined by Senior Policy Analysts at the CBPC, Alissa Anderson and Sara Kimberlin.

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Episode Transcript

Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.

Jim: And I’m Jim Pugh. In past episodes, we’ve talked a bit about the Earned Income Tax Credit, or EITC, as a policy that in some ways resembles the universal basic income and could potentially be expanded to more closely model the policy and to the live up to the aspects of it that so many of us find so interesting. One of our past guests, Chris Hughes, talked about his proposal for a guaranteed income, which is heavily inspired by the Earned Income Tax Credit.

But we haven’t delved too deeply into the policy to understand exactly how it works and what current proposals actually are moving and have been discussed as far as taking it more in the direction of basic income.

Owen: So, in this episode, we have some people who’ve done some deep analysis on this, in the context of the State of California. So joining us from the California Budget & Policy Center are Alissa Anderson and Sara Kimberlin. They are senior policy analysts. Welcome to both of you.

Alissa: Thanks very much for having us.

Sara: Yeah, thanks.

Owen: To start with, can you just tell us generally about the work that the California Budget & Policy Center does?

Alissa: Sure. So we are a non-partisan public policy research organization. And we basically seek to inform state budget and policy debates, primarily by analyzing the impact of policy proposals on low and moderate income Californians.

And so we cover a wide range of policy areas, everything from early care and education, K-12 education, higher education, health and human services, tax policy, housing, and many others.

Jim: Now, as I said earlier, one policy we’ve talked about in the past in relation to basic income is the Earned Income Tax Credit. Since we haven’t really gone into too much depth, do you mind just giving a brief description of what that policy is and what impact it has for low-income Americans?

Sara: Sure. So the the Earned Income Tax Credit is, originally it’s a refundable federal income tax credit that’s designed to allow low and moderate income working families to keep more of their earnings. And basically, it reduces the amount of federal income tax that families. They’ll get more money if they have more children, and it’s based on how much they earn.

But importantly, because it’s refundable, if the Earned Income Tax Credit is more than what a family owes in taxes, then they get the difference back as a refund. So they’ll actually get a check back from the federal government that you can help them increase their income and pay for their basic needs. So what that means is even families that don’t owe any federal income tax can get the full amount of EITC that they qualify for.

Some important things to know about it: for one thing, it actually has a very broad reach. About one in five tax filers in the US claims it. And it can be a very sizable cash benefit, so the federal EITC can boost families earnings by over a third to almost a half depending on the number of children with a maximum credit about $6,300.

And there’s also some other important things to know about it. For one thing, it’s been around for a very long time. It’s very well researched. So there’s a lot of evidence behind it showing that, for one thing, it lifts more children out of poverty than any other federal policy, that it helps increase families incomes. For another thing, it’s been shown to increase employment among single mothers, and single mothers with kids are the largest group that benefits from it.

And finally, it appears to provide benefits that really help the next generation. So for one thing, it’s linked to improved health for babies like higher birth weights. It’s a key predictor of future health and economic well being. And it’s also been linked to higher test scores for kids and higher high school graduation rates and college attendance rates.

So it just appears to be linked to a lot of really important positive long-term outcomes for kids.

Owen: Those are really fascinating findings. So, Alissa, EITC is a federal program, but a number of states provide a supplement to the federal funds, including California, where the supplement is called CalEITC. Can you tell us about the program and its specific impact?

Alissa: Yeah. So currently, 29 states have state EITC, and the District of Columbia does as well. And generally the purpose of state EITCs is to enhance the benefits of the federal EITC. Tt basically provides an additional state credit on top of the federal credit.

So California’s credit, which is called the CalEITC, was created in 2015, but it’s structured really differently from the way other state EITCs are structured. So California basically decided to target the state EITC only to workers who are facing the greatest economic needs, in order to be able to provide those workers with a much more generous credit.

So California’s EITC is actually far more robust than other state EITCs in terms of the size of the credit. Generally speaking, it provides the credit that’s about 85% of the federal EITC, whereas most other states provide credits that are 30% or less of the federal EITC. So our credit is actually the most generous refundable state credit in the nation. And so families with kids in California can get a maximum CalEITC of about $1,500 to $2,700 dollars, depending on how many kids they’re supporting. And workers who aren’t supporting children can get just over $200.

But the credit is only available to families with extremely low incomes, mostly families that are living well below the poverty line. And that’s different from the way other state EITCs work. In most other states, the state EITC is provided to all workers who qualify for the federal EITC, but because the states are providing the credit to so many people, they provide a much smaller credit. So there’s a trade-off there.

In terms of the impact, in each of the last two years, about 370,000 tax filers have benefited from the CalEITC. It actually means that many more people have benefited from the credit because a tax filer can be a married couple, it can be a parent with kids. It’s basically all the people listed on a tax form.

And this year, the credit has reached over 900,000 tax filers as of the end of March, so a few weeks before the end of this year’s tax filing season. And that’s because the credit was significantly expanded last year.

Sara: In terms of thinking about who the people are who benefit from the CalEITC, I think one important thing to note is it really overwhelmingly benefits children. Tax filers are eligible if they have low incomes and they aren’t supporting any children, but in fact, more than 90% of the CalEITC dollars have gone to families with kids. So it’s a really important tool especially for helping working mothers. If you look at the tax filers with kids who are eligible for the CalEITC, about 70% of them are women. So it’s especially beneficial for children and and working moms.

And the CalEITC is really targeted to reducing the depth of poverty. So in terms of how it affects poverty of among families who are eligible, it really brings families closer to the poverty line because it’s really focused on, the largest credits go to the families with the with the lowest earnings. It’s not really designed to lift families above the poverty line as much as reduce the depth of poverty because a lot of these are families where a single parent is working part-time or part of the year.

But another thing that’s important to note is, it’s important to think about the CalEITC in combination with the federal tax credits that the same families are eligible for. So if you look at the CalEITC in combination with the federal EITC and the federal child tax credit, which is another tax credit that low-earning families are eligible for, those three credits combined can really significantly boost the earnings of families that are really earning a small amount.

So for example, a family with three kids could see their earnings rise by as much as 92% And again, we’re talking about families who have very low earnings, well under $20,000 a year. So, again, if you look at the CalEITC plus the federal EITC combined, those lift over 800,000 Californians out of poverty each year. And many of those are children. So those credits combined also have lifted over a quarter million Californians out of deep poverty.

Jim: Wow. That’s great to hear that such a recent program that’s providing direct cash has already had such an impact. One thing I’m curious about: in past episodes, we’ve talked about some of the different barriers to access that exists for means-tested programs that we have today. And a really big one is simply awareness of the existence of the program. People don’t even realize that there’s more support available to them.

And I know, at least in the past, EITC has faced challenges around that. Can you tell us a bit about, what has the update bin for the program? And what has actually been effective at getting more people to be able to take advantage of it?

Alissa: Sure. So, it does appear that many people who are eligible for the CalEITC have missed out on it. And one of the ways we know that is, we conducted a survey at the end of 2016, so after the first tax filing season when the credit became available. And we found that fewer than one in five people who were likely eligible for the credit, based on their income and family size, had even heard of it.

And we also found that fewer than half of the people who appeared eligible for the CalEITC had even filed their taxes that year. So we have some evidence that people are missing out on the credit.

Unfortunately, we don’t know the exact uptake or the participation rate. We know how many people are receiving the credit, but we don’t have a really good handle on how many people are eligible for it. And really the key challenge is, the credit targets people who have such low incomes that many of them aren’t required to file state income taxes. And so if they’re not filing, of course, we don’t have tax data on them.

So I think you know the bottom line here is that, I think one of the keys to making the CalEITC success is for the state to invest more in promoting the credit because it could be that a lot of people just don’t realize they can get cash back if they file their taxes, even if they’re not required to file.

And I also think that it’s really important to connect low-income families to free tax services. I was really surprised to learn when I started studying the EITC that the majority of people who claim the EITC paid to file their taxes, even though all of them are eligible for free tax prep services. So it basically means the majority of people claiming the EITC don’t get the full benefit of their credit. And tax paid tax preparers are not very forthcoming about how much they charge people, but some research has suggested that EITC filers can be charged several hundred dollars, which for low-income family is a lot of money and they really need to get the full benefit of their credit.

And for the CalEITC population, because they have extremely low incomes, well below the poverty line, I would imagine that if they think they’re only filing option is to pay somebody that they really might not think it makes sense to file their taxes and claim this credit if they’re not going to get the full benefit anyway.

So I think one of the best things that California could do to boost participation in the CalEITC and also make sure that families are getting the full benefit of the credit is to expand and promote free tax prep services. Things like VITA, Volunteer Income Tax Assistance. VITA sites provide free tax prep services by volunteers who are trained and certified by the IRS, but only 2% of EITC filers in California actually use VITA.

Part of the problem is a lot of people don’t know about it, but I think an even bigger problem is that VITA sites just really don’t have the capacity to meet the great demand for free tax prep or the funds to compete with the advertising of paid tax preparers.

Jim: And beyond that, if we could get more people to be taking advantage of CalEITC, I imagine they would also be taking advantage of federal EITC, which would mean more money coming into California.

Alissa: No, absolutely, and that’s a great point. So I think there’s evidence that also suggests that the federal EITC is underutilized, and the research suggests that the people who aren’t claiming the federal EITC who are eligible for it tend to have very low incomes, the very population that the CalEITC targets.

So there’s a huge opportunity, now that we have a state EITC, to not only promote that credit but to also make sure that people are claiming the federal credit as well, which draws federal dollars into the state and can help provide a boost, not only to low-income families, but to the businesses where they spend their money.

Owen: Just a technical question: if someone is eligible for the federal or the CalEITC and they file their taxes, do they get it automatically, or do they have to take additional steps?

Sara: They’ll need to fill out the form that demonstrates that they’re eligible for it, but it’s like in standard tax preparation software with any paid preparer or volunteer VITA preparer, they would presumably go ahead and fill out that form and qualify for it. There aren’t any, it’s like filling out any other tax form when you’re filing your income taxes.

Alissa: And my understanding is that VITA actually trains their volunteers specifically on EITC because the population they’re targeting is eligible for that credit. They get special training on that credit in particular.

Owen: So the EITC naturally has a work requirement. What can you tell us, you mentioned single moms before, we can you tell us about the effect this has on incentivizing employment?

Sara: There’s strong evidence that the EITC does encourage people to work. And in fact, it was originally designed to encourage work, and that’s part of the reason why it had such strong bipartisan support over the decades that it’s been in place.

And the way it encourages work is by providing a more generous credit as families earn more income up to a point, so that generally the more people work, as they work and earn more, they get a larger credit until their incomes reach a point where it starts phasing out because their incomes are high enough to not need as much support.

So, there’s a large body of research on the federal EITC showing that it boosts employment, especially among single mothers who, again, are the largest group of beneficiaries. In fact, there’s some new research that’s come out in the past couple years that shows that when you account for the fact that EITC encourages people who aren’t working to start working because they get not just the wages that they earn from their job, but they also then qualify for the EITC, which increases their income for the year. When you account for that extra effect of people entering the workforce, EITC actually reduces poverty twice as much as previously had been thought to do.

So, there’s a large body of evidence showing that it really helps give people a reason to enter the workforce and and helps make the earnings that they get sufficient so it really can allow them to support their families much better.

Jim: Now, last year, you release a report that drew a connection, a direct connection, between EITC and universal basic income, and looking at specific steps that could be taken in California to expand CalEITC in that direction. Can you tell us what that expansion looked like and what really motivated your approach here?

Alissa: Sure. So, part of what motivated us was the fact that most discussion around UBI looks at how this could be implemented at a national level, but it might actually be more realistic politically to implement at the state level. And so we wanted to look at, how could we Implement a UBI here in California?

And so what we ultimately argued is that the CalEITC could really lay the groundwork for a much bigger, bolder basic income policy. And what led to that conclusion is that, we thought that providing a truly meaningful basic income, one that significantly cuts poverty, also ideally helps people above the poverty line who we know also struggle to get by in California, if it’s provided universally, it would be really expensive, and we’re not sure that the state could generate a revenue source large enough to do that.

So we thought through, okay, how could we how can we make the cost a little more realistic? And there’s two ways to do that: you either reduce the benefit, or you target it to fewer people. And so we would argue that targeting it to fewer people makes more sense because that way you can provide a more meaningful income Support to the people who need it the most.

Once we go down the road of targeting the benefit we thought, well, we also need to gradually phase it out, because otherwise it can create some sort of weird behavioral responses. So, for example, if the income benefit is only available to people with $50,000 or less in income, if it ends at $50,001, somebody would have a really strong incentive to not take a pay raise if it would push them over that income limit because they would actually be worse off without the basic income.

So once we go down the road of targeting the basic income policy and phasing it out gradually as income rises, what we find is that we’ve essentially recreated the EITC. And so we thought, well, why not build on our existing EITC as a way of moving toward a basic income policy in California?

And then there are a number of other advantages to building on our existing EITC. For one thing, the administrative cost would be low because you’d basically be piggybacking on an existing mechanism for distributing cash to people, the tax system. Plus, all the information you’d need to find out about who’s eligible for the benefit is already collected on tax forms, so it would be efficient.

And then also, when you provide a refundable state tax credit, it’s not subject to federal income tax. But if you provide a payment outside of the tax system, it likely would be. So for example, the Alaska Permanent Fund, which, as you know, is the closest thing that we have two basic income policy in the US, is taxed. It is considered income for federal tax purposes. So it means essentially the state, if we were to provide income outside of the tax system, essentially the state would be handing some money directly to the Feds. It wouldn’t be going into the pockets of the families that it’s intended to go to.

And then on top of that, if we provide a benefit through the tax system, and in the EITC specifically, it wouldn’t reduce eligibility or benefits from other public supports like food assistance or health coverage because EITC payment specifically say that they don’t count as income in benefit levels or eligibility for those other benefits. And a lot of families who are working and getting the EITC also do need other public supports to make ends meet, particularly here in California where we have a very high cost of living.

So we looked at a number of ways that we could make our CalEITC more like a UBI. And so one thing that we looked at is expanding it to people who don’t work for pay but who are engaged in productive activities. So, for example, students pursuing higher education: you could provide the credit based on how much time they spend in school, for example. You could provide it to caregivers, people taking care of young kids or elderly adults or people with disabilities who are doing legitimate work, but they’re just not getting a paycheck for it.

And eventually, maybe, open up the credit to all people without earnings from work, which is somewhat radical idea here in the US, but there certainly is precedents for this because many advanced industrialized nations do provide child benefits that are not tied to work.

And then the other thing we looked at is exploring providing workers who qualify for the CalEITC to opt-in to receiving it as a monthly payment, as opposed to just a lump sum. And the advantage there is that it would allow workers to kind of smooth out their incomes over the course of a year. And it could also serve as sort of a forced savings account.

Owen: Yeah, it’s always interesting to think about the concerns we’d have if we were introducing a program like that right now, as opposed to something where we’d, maybe in 20 years, where we’d have a chance to work out the kinks of whether this income counts toward federal taxes and that kind of thing.

So you started to get into this in the last answer, but both the federal EITC and the CalEITC, in addition to including a phase-out, include a phase-in. So someone who doesn’t earn any income doesn’t receive any benefits, but they will gradually receive more money as their annual income increases up to a certain point. This means anyone who doesn’t have a job or is engaged in unpaid labor, Like you mentioned, doesn’t receive any support through the program.

So you mentioned addressing this through including other types of labor, such as family caretaking or being a student. Another way to do it would just be to eliminate the phase-in, so that people with zero income would receive maximum benefits, which would effectively convert the EITC into a negative income tax, which is the form of basic income we were testing in the 60s and 70s.

What do you feel like the pros and cons are of these two approaches?

Sara: It’s relatively easy to imagine support for the idea of eliminating the phase-in for people who are doing things like caregiving or going to school, doing different kinds of productive activities that are not paid employment, but they’re productive activities that benefit the community broadly.

So, for example, the pros of allowing caregivers to to claim the credit, regardless of income: for one thing, it rewards the work that is necessary, but typically unpaid, and would also do things like help address the lack of affordable child care and affordable options for caring for elderly relatives or people with disabilities and their families.

But it’s also important to note that, not just those families and individuals, but also the community at large really benefits when children are raised in families that are not facing economic insecurity, because children who are raised with enough income and their families have better long-term health and education outcomes. So, over the long term, they become more productive worker and are likely to need less public support as adults. So I think is a very clear argument, very clear sort of bipartisan argument for why there’s a good state interest or public interest in supporting individuals who are doing caregiving work.

And similarly with students who are the same way, we know that a lot of low-income students face a lot of struggles to meet their basic needs and really be able to afford to stay in college long enough to graduate, which is a really key problem in the community again. Not just the students, but the community benefits from having a better educated and more productive future workforce. So I think there are clear pros on both, of course, the individual level and at the state level or community level for eliminating the phase-in and allowing those kinds of individuals doing those kinds of activities to to claim a credit without any kind of phase-in.

Extending it down to anyone without paid work would definitely be a much more radical idea. Again, though, if you eliminated the phase-in for anyone who has children in their family or anyone who is caring for dependents regardless of what age they are or anyone who’s raising children or dependents, I think there’s a lot of research that shows that children growing up in poverty face a lot of serious disadvantages over the long term. And so helping ensure that their families have enough resources when they’re young can really pay off over the long term, both those children and also for society at large.

And again, many other countries, and in fact, even the United States, we provide a child tax credit and child benefits for tax filers with children that are not specifically linked to how much income you make, kind of recognizing the fact that there are costs associated with raising kids, and it’s in everyone’s best interest to make sure kids’ families have the resources they need when the kids are growing up.

I think a lot of the cons in terms of eliminating the phase-in are largely political. The key argument against it is that it would discourage paid work because if you can just claim the credit whether or not you have any earned income and the amount of credit you get doesn’t depend on your earnings, then you might be less inclined to go take a low-wage job or a part-time job or anything that would give you an earned income that was less than the amount of credit you could get, less than the amount of basic income you could get.

Although again, in the context of thinking about this as a state policy, I think it’s important to note that the federal EITC is structured with a phase-in, so there could be opportunities to eliminate the phase-in at the state level, and there would still be an incentive to work based on the federal credit that people would be eligible for.

And, of course, the other major con would be just that it would significantly add to the cost the more you expand the the population of people who are eligible. So that again gets into the question of trying to figure out how to prioritize how much credit and who gets the credit in order to make it financially feasible.

Jim: You just touched on the politics around this issue, and I’d be interested to delve a bit more into that. Is there currently political movement towards significantly expanding EITC in California? If so, where is that at? If not, what might that process look like?

Alissa: Yeah, absolutely, there’s a lot of support for continuing to build on our state EITC. So, first of all, we have a lot of champions in the legislature that have been strong proponents of the credit since it was first created. So, for example, Senator Toni Atkins played a really critical role in getting the credit established when she was Speaker of the Assembly and now she’s Senate President Pro Tem. Assembly Budget Chair Phil Ting, who represents parts of San Francisco, has also been a champion of the credit, and he signaled his strong support for a robust expansion of the CalEITC this year through the state budget. And there are many other legislators who have carried bills over the years to strengthen and expand the credit as well.

Also in California, there’s a large coalition of over 30 organizations that’s been advocating for continuing to build on the CalEITC ever since it was created. It’s called the CalEITC Coalition, and they advocated for the expansion of the credit last year, and they’re continuing to advocate for further improvements in the credit this year and beyond.

And so specifically this year, the Coalition is proposing to make the credit more inclusive because there are a number of low-income workers who have the incomes to qualify, but who are actually ineligible for the credit, and many immigrant families who work and pay taxes also don’t qualify for the credit because their primary earner doesn’t have a social security number that’s valid for work. And so that means many children don’t have access to the credit, and that even includes US citizen children.

So the Coalition also is supporting the proposal that Assemblymember Ting put forward late last year that would significantly expand the CalEITC over the next few years and really provide much greater financial security to working families in our state. Basically, the proposal is to raise the income limit to qualify for the credit from about $22,000, where it is currently, to about $31,000. And what that means is a full-time minimum wage worker would be able to access the credit even as the minimum wage rises to $15 per hour over the next few years.

And then his proposal would also increase the size of the credit across the board for everyone who’s currently eligible for the credit. So, there are numerous other ways that the credit could be strengthened or expanded, and the Coalition has some ideas for other options to pursue in future years, but that’s really sort of currently what’s moving. And there’s certainly people in the legislature who are strongly supportive of the credit and really want to make it a success and make sure that it reaches as many people in the state who are working and struggling to get by as possible.

Jim: That was Alissa Anderson and Sara Kimberlin, both senior policy analysts with the California Budget & Policy Center.

Owen: So I thought first and foremost, it’s just a good reminder of how powerful the EITC is, both federally and and statewide. You can have certain objections to who it leaves out and how it phases in — I think we might desire some modifications around that. But just in terms of its effects, it’s keeping millions of people out of poverty.

Jim: Yeah, and not only is it effective in making a huge difference, it is actually an area where movement is happening, that this is a pretty new policy in California, and there are ongoing, well-backed efforts that have very strong shots at success to make significant improvements. And so, if we’re thinking about what sort of policies can move right now, this is definitely one of them.

Owen: Yeah, it’s nice to hear that we have people who are pretty powerful in the legislature, especially Toni Atkins who, like they mentioned, just became our Senate Pro Tem, who are big backers of this program and sound open to expanding in.

Jim: Yeah, I’d be curious to try to understand more what those barriers are, political barriers are, to actually taking this to be a negative income tax. I thought the point about how a state could do that, because the federal EITC has the phase-in, as far as incentivizing work, to the degree that happens, that that would still exist. But it’d be interesting if we started having more conversations about making that change in California and perhaps other states who have those states supplements to the federal EITC.

Owen: Yeah, and it sounds like people are open to the idea of at least eliminating the phase-in for parents or other caretakers, you know, people taking care of elderly grandparents, perhaps, students. And maybe if you start shaving away some of those exceptions, you can start to get close to it just being a universal program.

Jim: True. I do think that there’s an interesting question about, is it more effective to chip away at it that way, and that eventually gets you to a full negative income tax, or should it be something where in one go you say, everyone ought to have this, as opposed to starting to really enumerate and list out those particular categories that you deem are worthwhile.

Owen: Yeah, I think it would be cleaner if you could just do it all at once, and it would be more of the program you would design if you are starting from scratch. But I also don’t really see them as mutually exclusive projects. I think the closer you can make it so that a true negative income tax is a smaller leap, that I think is going to be good progress either way.

Jim: Well, it’ll be exciting to see how this develops in the months ahead.

Owen: Yeah, absolutely. Thank you for listening to the Basic Income Podcast. Thank you to our producer, Erick Davidson. Please subscribe on Apple Podcasts or the podcast service of your choice. And please tell your friends — we’re always looking to expand our audience, and word of mouth is always the best way to do that. See you next week.

The Basic Income Debate in Australia, feat. Emma Dawson

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The Basic Income Podcast

The Basic Income Debate in Australia, feat. Emma Dawson

00:00 / 39:48

With a recent proposal for universal basic income by Australia’s Green Party, the debate over the policy is alive and well down under. Owen and Jim spoke with Emma Dawson, Executive Director of Per Capita, a progressive think tank in Australia. Dawson is a strong supporter of Australia’s social programs but is skeptical that universal basic income is right for her country.

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Episode Transcript

Owen: Hello, and welcome the Basic Income Podcast. I’m Owen Poindexter.

Jim: And I’m Jim Pugh. Those of you who have been following recent basic income news may have heard about a proposal that came out just in the last few weeks in Australia. Now most of our conversations on this podcast tend to focus on US policy, but the conversation around this really is an international one and what happens in places around the world can shape perspectives, and certainly there can be similarities and also differences on policy solutions in different places.

Owen: So for this episode we’ll be speaking with Emma Dawson. She’s the executive director of Per Capita, which is a progressive think tank in Australia. And we’ll be discussing a recent proposal there around basic income which she has some concerns about. So welcome Emma.

Emma: Hey, nice to be with you.

Owen: So we’ve had some guests from countries around the world in the past. And like Jim said, we tend to focus on the US and the challenges we have here and what basic income might look like in this context. However, as we discussed in a recent episode with Professor Alma Zelleke, the assumptions and values inherent to the social safety net in a particular country have a major impact on what new policies solutions will prove effective.

So to start with can you just tell us generally about the current state of the economy and social programs in Australia and what challenges you currently face?

Emma: Sure. So Australia is a growing economy, a reasonably large economy. We’re a wealthy nation, second only to Switzerland in terms of wealth per capita, and we actually hold the world record now for the longest period of uninterrupted economic growth. So we’re going to 26th year without a recession. And unlike a lot of countries, we didn’t go into recession during the GFC. We had a a government that implemented a fairly Keynesian style fiscal stimulus package at the time and kept a lot of people in work that otherwise almost certainly would have been thrown out of work.

We also have a fairly strong social safety net. We have the most tightly targeted tax and transfer system in the OECD. So our welfare spend is very carefully targeted to those who need it. There is a degree of so-called middle class welfare, but certainly not as much as you might find in other comparable jurisdictions.

We have a reasonably strong minimum wage. It’s I think $18 39 Australian, which is which is a little under $15 US an hour, is the absolute minimum wage. We also have, of course, universal healthcare. So we have some some measures in place in our safety net that certainly aren’t there in the US.

At the same time, all those headline figures look really good, but we do have a higher unemployment rate than the US. It’s currently sitting around 5.5, 5.6 percent and that hasn’t budged for a long time. We have a very high rate of under utilization in the labor force, so we have about 1.1 million out of our population of 25 million. We have that 1.1 million people that are looking for more work than they’ve currently got, and you only need to be employed for one hour a week here to count as employed in the statistic.

And our wage growth is pretty stagnant. It’s sitting at around 1.9 percent per annum at the moment, which is barely keeping up with inflation. And our inflation measures, of course, take into account a whole range of costs and prices, but the most significant prices, things that are not that are essential spending like electricity, housing, healthcare, and education, those costs are rising at a rate rapidly outstripping wage growth.

So people in Australia are feeling squeezed. Our economy looks to be in good shape from the headline figures. But the reality on the ground is that I would argue, and certainly most people on my side of the political debate here are arguing, that prosperity is not being fairly shared at the moment with working people and particularly with people that aren’t working that are out of the workforce for whatever reason.

Our New Start payment, which is our unemployment benefit, is I would say criminally low. It’s as low as 250 Australian dollars a week, which is well below the poverty line. It hasn’t risen in real terms for a quarter of a century. Our pension age pension rate was lifted under the last Labour government, that’s our, you know, you would call them liberals, although the Liberal Party is our conservative party here.

The age pension rate was given a boost then, but it’s still barely adequate particularly for people that don’t only home. And single renters find it very difficult on their pension. And similar payments like the disability support payment another income support measures, I would argue, need lifting considerably in a country that I said is per capita the second wealthiest in the world.

Jim: Now there’s been quite a bit of media attention directed to a recent proposal from Australian Senator Richard Di Natale, leader of the Australian Green Party, to establish a universal basic income in Australia. I know you have some concerns around that proposal, and we’ll get to that in just a moment. But can you start by describing what exactly has been proposed here?

Emma: Yeah. Well, it’s difficult to do so because there wasn’t a lot of meat on the bones of Di Natale’s proposal. He made it at an address to the National Press Club, which is our, you know, primary forum in Canberra, the capital, for politicians to speak to the press over here.

And really the headline of that address, there are a few, it was a bit of a grab bag of policies as I said in my article critiquing his announcement, but the UBI was kind of thrown in there. And all he said literally and I can quote him, he said: “That’s why we need a universal basic income. We need to UBI that ensures everyone has access to an adequate level of income as well as access to universal social services, health, education, and housing. A UBI is a bold move towards equality. It epitomizes a government which looks after its citizens. It’s about an increased role for government in our rapidly changing world.”

And that was about it. And the Greens haven’t announced any other detail on that policy proposal on their website or in any of their policy documents. So it was really a kind of, we think this is a good thing, but we haven’t we haven’t thought about it much further. We haven’t costed it. it’s not a detailed or costed policy proposal from the Greens at this point in time. That’s pretty much all that I’ve been able to find. Although their research institute, each of the political parties here has an affiliated think tank or research institute, and the Green’s think tank certainly has been advocating for a UBI for some time, but it hasn’t made it any further into formal policy adoption by the party as yet as far as I can see.

Owen: So even at that high level description of the policy, you’ve got some concerns around it. I believe a number of aspects don’t make sense. So can you just talk us through some of those concerns and also share what new or expanded policies you feel would best address current social challenges?

Emma: Sure. So, the UBI debate here’s a live one as it is in the States on what I call my side of the political divide. I’m a progressive. I’m very concerned about social justice. Our think tank Per Capita is focused on fighting inequality in Australia. So UBI has been a live issue for us for a while, and I’m certainly a bit of an outlier compared to some of the other thinkers in our space on the UBI, and many of my colleagues, some of them within Per Capita, some with affiliated organizations that we work with are proponents.

My concerns are, they’re multiple and they come primarily from a practical point of view, but also some philosophical concerns, and it’s important to be clear that when I talk about a UBI in Australia, the U, almost with everybody, stands for Universal rather than Unconditional. I have no problem with the basic income card, it’s the universal part that gives me cause for concern.

And particularly in the way that Di Natale talked about it. Literally, he said we need a UBI that ensures everyone has access to an adequate level of income as well as access to universal social services, health, education, and housing. Now, I don’t want to see any of those Services disappear. I think they’re critical and they are fundamental part of what makes Australia a pretty good place to live.

But if you are going to fund a UBI at an adequate income leve,l and in Australia that poverty level would require every adult to get about 23,000 Australian dollars a year to be above the poverty line, then some pretty reputable costings done by Peter Whiteford at the Australian National University here has found that that could be around between 250 and 350 billion dollars a year in additional tax revenue.

So even if you take the roughly 160 billion a year that Australia currently spends on income support on its social safety — our social services programs, unemployment benefit, age pension, disability support, etc — even if you got rid of all of those payments and replace them with the UBI, you couldn’t save all that 160, you’d need to retain some of it because it’s spent on administration and and bureaucratic systems and so on. You’d still need to raise at least another three hundred billion dollars a year in tax revenue.

And that’s a pretty big ask at the moment our government. Our government parliament system isn’t quite as riven as bipartisanship conflict between the parties as yours, but it’s getting there, and we have a conservative government at the moment that is all about cutting taxes for businesses and cutting spending on social services. And the idea that we’re going to raise another 300 billion dollars anytime in the near future I think is fanciful.

If it were to be done, some early costings by Ben Davison and Miranda Steward at the Australian National University, which are underway at the moment, but their early findings have been that there’d be need to be a minimum income tax rate on working people of around 40%. It’s currently sitting at the average is about 27. So the average so the average working income tax rate would lift by 13% on high-income earners and be as high as 78%. It would require a wealth tax which would mean placing a tax on the value of the family home, which in Australian political history has proved to be political suicide for anyone who suggests that.

Now I do support wealth tax actually. I think it’s where we need to be as a country. I think taxing income rather than wealth is inherently regressive, but to shift from what we have now to attack some transfer system that would require such a massive change to the tax base I think is going to be virtually impossible to achieve.

So that’s my first very practical concern about the suggestion. I’m interested in what we can do now to help people that are living on $250 a week while they look for work or living on $400 a week as on the age pension and they don’t own their own home or people who are being forced into disability support payments that are barely adequate to live on.

We have a system at the moment that’s incredibly punitive towards people that need our help. Our current unemployment benefits cost us about 1 billion dollars a year. So if we were to increase that payment that 250 dollar a week payment by just the $50 that the Australian Council of Social Services and union movement is suggesting, that’s around two billion dollars, which is 1% of the cost, less than 1% of the cost of the UBI, and I’d like to see that happen tomorrow.

So that’s my first concern, really, but then the thing that attracted the most criticism and I think the most misunderstanding from the article I published a couple of weeks ago was when I said that a UBI robs people of agency. And that’s probably something I should explain a little bit further.

Owen: Yeah, please, go ahead.

Emma: So my concern there is, not that giving people who are in need of income support for whatever reason a cash payment of their fair share of government of tax revenue and of national revenue and prosperity robs them of agency. I don’t believe that at all.,I think we should give people a decent basic income without a whole heap of conditions that makes it impossible to get and that just provides them with dignity.

And there is a lot of evidence from around the world that if you do that, they’re much more likely to be productive, find purpose, and have agency over their lives. So that wasn’t what I was saying. What I’m addressing is specifically when people hold out the UBI as a solution to the disappearance of work, that this argument that the robots are coming, and they’re going to take all our jobs, and there’s not going to be any work for anyone anymore. And so the answer is just to replace income.

My argument is that, that’s very nice and very good and it will keep people out of the poverty line, but it negates the other values of work, the values of work that go beyond providing income, which are that it does give people a sense of purpose, it allows people to feel that they’re in control of their lives, that they’re managing adequately to provide for themselves and their families, that they can do that themselves without relying on support from an external party. And I think a lot of advocates of the UBI too easily dismiss the value of work beyond income.

And I know that a lot of arguments about the UBI are saying, well, it allows people to do other things, and more meaningful things, and it supports entrepreneurship, etc. etc. It has to be set at a really high level for that to be the case, even more than the 300 billion dollar cost that I was talking about earlier, for people to be able to genuinely thrive and be creative and perhaps start a new business or pursue some artistic pursuit. You need to provide them with a pretty serious level of income.

Even if you did that not all people are going to do that. Not all people are waiting to write the next novel or start the next Uber or whatever. A lot of people find value in work just from going to work, being with other people. It’s the social aspects of work. The value of just getting up every day with something to do with a purpose that allows you to provide for yourself. That work itself doesn’t always have to be for a lot of people incredibly creatively fulfilling. There is value in what in Australia, and I know in the US as well, we’ve traditionally called Blue Collar jobs.

I think there is a worrying tendency amongst a lot of highly educated progressive caring advocates of the UBI to dismiss Blue Collar work and say those jobs are crap anyway, and if they go, people will be able to do better things. A lot of people engaged in those jobs don’t think they’re crap, you know, they they actually get a lot of value out of going and working in a manufacturing job or a retail job and engaging with people.

And so I’m a lot more concerned that we don’t just lie down and say the robots are coming and there’s nothing we can do about it and let’s implement a UBI. I think there are things we can do about it, we can protect work and the value of work and the inherent dignity that comes with having a job.

Sure, if some jobs are disrupted, and there’s a lot of evidence that a lot of Industries will be disrupted. They have been throughout history right since the first Industrial Revolution. There are going to be people that are thrown out of jobs that they’ve held for a long time and they are going to need a lot of help out to find something else and some of them will not, some of them will be at a stage in their life where retraining or reselling or adapting to a new job is going to be, if not impossible, then too difficult to manage in the time available. And we absolutely need a decent level of support for them, a basic income for them.

But I’m not happy to say that should be our primary focus. Our primary focus should be to help as many people make the transition as possible and find something meaningful and rewarding to do with there.

Jim: The concerns you just let out very much echo concerns that we often hear in the United States. And I think, we’ve spoken on the podcast a few times about this in the past, but I do think that there is a challenge that arises when you mix and match basic income as a means of addressing current challenges versus basic income as a way of dealing with coming rampant job loss from automation.

And where I think our perspective has landed is that from the automation perspective, basic income would be necessary. but not sufficient. That if you actually end up in a world where there really is not enough work to go around, as someone who wants to support people, you should make sure everyone has money, but that you would absolutely need to have programs or changes in culture beyond that in order to ensure that the structure that jobs provide today, that the lack of that would not cause much larger issues.

Emma: Yeah, look, I’m on board with that. I’m still questioning why we’re all still working 40 hours a week when you know, it’s 75 years since Keynes told us would be working 15 hours a week. I’m a big advocate for the shorter working week. I think we need to divide up the hours of work a lot more evenly than we do.

We know in Australia that around one in five people want to work less than they’re working. And another one in five people can’t get enough hours, and there’s a crazy mismatch there. If we could reduce our working week to 30 hours a week, and in Australia the basic rate is 37.5, but we have some of the world’s worst overtime workers, people that work long hours without being paid particularly in the professional classes.

If we produce the working week to 30 hours a week for a start, we’d see a lot fairer distribution of hours. It would be incredibly helpful particularly for women who continue to take a disproportionate burden of unpaid work, and we haven’t talked too much about unpaid work yet, but it’s a critical part of this debate, as you know, as you often talk about on your podcast. I’ve listened to a few episodes.

I think that a fairer division of working hours with a shorter working week and a cultural shift that could see men and women equally say, well, I’m leaving to do school pickup today. I’m going to take the Friday, to do the to do the laundry and the grocery shopping and share that that unpaid burden a lot more evenly, we’ll see a massive shift in society. And the way the old ways of working where we structure all of our social security payment, our working week hours, even our transport and commute times around the idea that the man goes out to work at 8:30 in the morning and comes home at 6:30 at night and the woman picks up the slack at home. That’s a nonsense and it’s always been a nonsense frankly. It’s a particularly middle-class, mid-twentieth century phenomenon. I come from an originally working class Northern English background, and the women in my ancestry pretty much went out to work at the age of 12 just like the men did in cotton mills and so on. So working-class women have always worked.

And the structures that we have in place in society just need to shift massively. And I completely agree with you that those things are absolutely necessary. At the same time as we do look at what’s in place to support people when they can’t work for whatever reason.

And there are there are good reasons to not be able to work. For a start, in Australia, there aren’t enough jobs. A colleague of mine said the other day, if every job candidate in Australia was the absolutely perfect candidate that was immaculately presented in a suit and tie with a polished CV and exemplary experience, the unemployment rate would be exactly what it is today. Because there aren’t enough jobs for the people looking for work.

Quite apart from that, there are people that can’t work because of disability or illness or because they’re caring for family member, children, elderly parents, another family member with disability or illness. They may have a mental illness. There are legitimate reasons that people can’t work, and we need to support them better when they can’t. But if we could divvy up the work that is there for the people that want to do it in a more rational and reasonable factor and all get a little bit more time to look at the other aspects of our lives as well as paid labor, I think the world would be a much better place.

Owen: Yeah, I certainly share a lot of those goals. I see basic income as something that could help us get there too, perhaps a shorter work week and more equitable, better distributed, labor all around. In terms of cost, just in terms of how much you’d have to give to each person and what the total figure would be, it is a very large number. One way that people have talked about addressing that is through a negative income tax. So, the sort of two basic ways you could do it, it could be either through just distributing variable payments with the amount determined by an individual’s current income level, or it can be implemented through the tax code with full basic income payments going to everyone and increasing the tax level to retrieve the funds from higher income earners.

You started to touch on that in a previous answer, and I’m curious, first, if you support any implementation of a negative income tax, and second, does your support differ between those two designs?

Emma: Look, again, just up front, I want to make clear that the basic income part I support, it’s the universality that’s the problem. And that’s what we’re talking about here, whether it’s the basic income model or the negative income tax model. And no I don’t, for practical purposes and partly philosophical purposes too.

For practical reasons, even if it was implemented through the tax code, which tends to be the model that’s talked about in Australia because we have a strong tax and transfer system here and progressive taxation. It just essentially leads to what people call tax churn. And the cost of administering that, I don’t see how they’re defensible when you’re essentially handing out money only to get it back through the tax system. So, people don’t receive that. It just basically would lift their tax free tax free threshold, and not by much. I mean, their tax free threshold here, the amount of money you can earn before you start paying taxes, currently about 18.5 thousand dollars a year. A UBI set at the poverty level would be about 4.5 thousand more than that.

But the income tax on wealthy people would still, in order to make that payment a livable payment, and in order for the UBI to work the way advocates say it will work, which is allows people to refuse badly paid or work with poor conditions, it needs to be a significant payment. And so I don’t think that that we’re going to get agreement from the Australian populace to lift tax rates on the wealthy by that amount that drastically that quickly. I just don’t believe it’ll happen, and I think there are there are other priorities.

But more than that, a lot of the arguments that I hear is well, if you give it to everybody then it de-stigmatizes welfare. If everybody’s receiving the payment, then those punitive approaches that we see towards people receiving income support go away because everyone gets it, so then rich people won’t complain about paying for poor people. That argument just doesn’t hold water with me, firstly because if rich people aren’t actually seeing the cash payment because it’s being done through their tax system, they won’t perceive it that way anyway.

But even if they did, I think we’re better than that. I think it’s up to those of us on the progressive side to persuade people that paying their fair share of tax to support citizens, their fellow citizens that are in need, is the right thing to do. It’s the price we pay for civilization, and we can do it by persuading people rather than bribing them, which is essentially what a universal income is. It’s saying, well, if we give it to everybody then people won’t complain about those that need it, and they’ll just take it because they think they’re getting it too.

I maybe maybe have a little bit more faith in him and nature than that. And I think the left for too long has capitulated to neoliberal arguments around tax and spend and reducing the size of government and the fact that those on welfare are a drain on the rest of us. And it’s time we fought back directly against those attacks rather than capitulated to them and say okay, then we’ll just bribe everybody to be good people and pay their fair share.

I find that, I can’t make that capitulation. We recently released in Australia a report that we did at our think tank for Anglicare, which is one of our social service providers, that found that the tax of, the cost of foregone revenue to our federal budget, the money that we’re not collecting from people in the highest 20% of income in the country because of tax concessions, things that we allow them to do to reduce their taxable income like, salary sacrifice into their superannuation savings, their retirement savings, and get a tax discount and things like that, that’s costing our budget 68 billion dollars a year.

And if you average that out, that’s 37 dollars a week for every taxpayer that’s going to make the wealthy people here more wealthy. The government came out in January here with an attack on people on welfare saying every person on welfare is costing the Australian taxpayer 83 dollars a week. And if you broke that down, the cost of someone living on an unemployment benefit to the average taxpayer, as they like to say, per week was six bucks. Six dollars a week was coming out of my pocket to support someone on income support, but 37 dollars a week is coming out of my pocket to support people so they can have a holiday house and and a luxury car.

I think we can win that debate without handing out cash payments to the wealthy.

Jim: I think that’s a great point, and it brings up some almost philosophical questions about, and I’d be curious to know more about what what the specific perspectives are there, but certainly in the US, the sort of Welfare Queen myth. This idea that yes, you have this class of people that is a drain on the system, has been so indoctrinated that the amount of effort to tackle that head-on seems, honestly, it seems like a much larger task in many ways than to pass something like basic income and to increase our tax base here by massive massive amounts.

So I think it seems like we have big challenges ahead of us no matter which direction we take here, and perhaps there’s different interpretations as to…

Emma: And look, I’ve said to people on social media over the last few weeks when I’ve been engaging with people in the States about my views: if I was in America, I might have a different approach. You guys don’t have universal healthcare. Your minimum wage is pretty woeful. You don’t have nearly as well targeted a welfare state as we do. So I might say, look, fixing that really is too hard, and it’s easier to do UBI. I don’t know, maybe that’s how I feel if I was living in that environment, but here I don’t think that’s true.

And I do think it’s an indictment on the Left, if you want to use the universal term for your Democrats, are our Labour and Greens Parties here. It’s an indictment on us that for 30 years, we’ve let neoliberalism win the debate to the point where, as you say, that Welfare Queen narrative is so entrenched that we feel it’s impossible to overturn that and we have to go and look at new things that that are pretty radical.

And there have been some pretty convincing arguments as well that a UBI is in a way a capitulation to capitalism. It’s saying that the only way of valuing any kind of work or any kind of existence is through cash. This comes back to the argument about, well, it supports unpaid work. Well, yeah, that’s great, and I think that we need particularly for women who take a lot of time out of the workforce and are not rewarded for that and end up in Australia with half the retirement savings of men. Women over 55 here our fastest growing group of homeless people. That’s directly because they they take the burden of unpaid work.

And so I do think, we saw our last progressive government in here finally introduce paid parental leave. I think that leaves you guys as the only English-speaking advanced nation on Earth that doesn’t pay for parental leave, so at least we’re getting there. But those things need to be recognized, and we do need to reward unpaid work, particularly if we’re going to close the the equity pay gap and gender equity across the board.

But I also take some issue ideologically with the idea that the only way of recognizing volunteering and caring is by giving people cash. It’s really a pretty big ideological capitulation to capitalism.

Owen: Yeah, I can understand that. I feel like one thing that appeals to me about basic income is that you don’t have to anticipate every situation, every person who’s in need or who is doing work that should be compensated in some way and isn’t. And while cash is, it’s impersonal and it is, as you said, a capitulation to our capitalist system, it is just kind of universally valued and effective. And so that’s what appeals to me..

Emma: I was more being ideological rather than practical. I fully accept that.

Jim: So one thing I would say beyond the specific practicality or even the ideology of the policy itself is something that I would say has come up amongst the many supporters of basic income that I’ve talked to. Pretty much everyone, regardless of whether you support or oppose the policy, would agree that universal basic income would be a radical shift over what exists today. And many supporters see that as a positive and actually feel that we need to have some really out there ideas as a way of pushing people outside the traditional political box and encouraging bigger thinking. So I’m curious what your perspective is around around that interpretation.

Emma: Radical ideas are essential and I wouldn’t be engaged in the debate if I thought it wasn’t worth talking about. I think it’s great to have the debate because it focuses on what the issues are and what needs to be done and that there really are incredible imbalances in prosperity in the way that we treat citizens according to some pretty arbitrary decisions about what’s of value. And that growing inequality in the developed world is a huge problem.

So I really value the debate because of that, and I love radical ideas. I’m arguing against it because it’s worth arguing this issue. It does make us think about, you know, we might not all agree on ultimately what the solution is, but the thing I found over the last few weeks since I came out against the UBI, as people have put it, is that myself and most of the people on my side of the debate, we all agree on what the problems are. And if we can shine more light on those problems and get more debate around those problems and the different things we can do to fix them, that’s only a good thing. And often that’s only achieved by debating the radical ideas.

So no, I love the debate, which is why I do engage with everyone that contacts me on Twitter or however, even the ones that get pretty nasty at times. I always try and answer the questions because the contest of ideas is I mean, I work in a think tank, so yeah, that’s something I think is pretty important.

So no, I think radical ideas have to be out there. Keynes was a radical economist. He’s probably my go-to economist when it comes to these issues. I like radicalism. It’s what shifts the debate, it’s what moves the needle, shifts the needle. But yeah, I’m still focused at the end of the day of what can we do now to lift people out of poverty? What can we do now to give kids a better start in life, to get a better equality of outcome as well as of opportunity for people in society? And that’s going to paint me as a Communist in some parts of America, but I’m really not one, I’m considered quite Center Left here in here in Australia.

But you know, what can we do now and what’s practical, and if that means engaging with debate and saying look, UBI, nice idea in a utopian world. Maybe one day we’ll get there. But at the moment let’s focus on the BI part for those that need it and not give up on creating jobs and responding to automation the way that we have through every other industrial revolution of the last 250 years.

But yeah, let’s all agree on what we do agree on, which is we need to address the balance for working people and for people that can’t, for whatever reason, work and that needs support from the rest of us. Because we’re a society. We’re not an economy. We’re a society. We’re not a collection of individuals. We are actually, you know, we function best when we look out for one another.

Jim: That was Emma Dawson, executive director of Per Capita, a progressive think tank in Australia.

Owen: So I thought she laid out a lot of the main objections to basic income in a really well thought out way. And I’m glad we got some time to focus on the idea that a basic income, you know as she put it in the article, robs people of agency, and I think she got a better chance to kind of explain what she meant by that in the podcast. And I think that’s going to be really key to advancing basic income is to show people that this is not about giving up on work and that that’s still going to be pretty core to what we do, but the basic income is still a necessary part of that.

Jim: Yeah, and as we talked about recently in the episode with Andrew Yang, either we talk about universal basic income as a solution for what we face today, or if we’re talking about it for farther in the future, then yes, we need to have more. We need to talk about what is the answer beyond that. That expecting just giving people a base amount of cash every month, that is not a sufficient replacement for the structure that our labor force currently provides. And even if you believe that we may eventually get to a point where everyone in our society is fully self motivated and can figure out for themselves what they’re gonna do and have new community structures. That world looks so different than what we have today. If you’re talking about basic income to address automation, I think there is a degree of responsibility to go that one step farther and talk about what that other transition looks like as well.

Owen: Yeah, I also thought it was insightful to hear from someone who lives and works in a country that does have a more robust social safety net than the US, where it’s easier to see just patching up the holes in that social safety net as opposed to a brand new program. I do, you know, I’ll stand by the point I made in the interview that I think a blanket approach is always going to catch people who you’re just going to inevitably miss, but it is I think helpful to have that perspective.

Jim: Yeah, I found it very interesting, her perspective that it was going to be easier or at very least the right way to try to change people’s perspective on deserving and undeserving members of society and that moving to a place where there wasn’t stigma attached to people receiving some sort of welfare or social benefit program that was delivered in targeted way, that that was the more appropriate path to go down than to say everyone gets this. This is just something that we receive for being alive. I think that it’s very hard for me to imagine that being a more viable way to proceed here in the States, and it’s interesting that her view is that that is the case in Australia.

Owen: Yeah, I mean I do agree with her that it’s a little bit shameful that the Left has not really made a serious effort to counteract the Welfare Queen idea. But yeah, at the same time, I feel like it’s always just going to be there if you have the sort of safety net that we have, especially a weaker one. I wonder if having a stronger social safety net gives more people pride and makes it less of a stigma around receiving benefits from it, but I do feel like conservatives in whatever country will tend to target those benefits to reduce to reduce government spending.

Jim: And I think, finally, I really appreciated her perspective on debate around big ideas. I think that there are people out there who have different interpretations of what the right way to proceed is, but when you dig in you see we’re actually trying to do the same thing, and if we can actually come to that alignment and agree that we need to be talking about some more radical change, that seems like a really productive conversation to have probably.

Owen: Yeah, I was struck by how many of her bigger long-term goals line up with mine.

Jim: One more thing I’ll add: when Emma posted her article opposing basic income on Twitter, it drew a lot of critique, not shockingly. And some of that was productive, but there was also quite a few pretty disrespectful responses, questioning her knowledge and understanding of the economics here. Obviously as we just heard, and what you could have figured out with, I think, literally ten seconds of googling, she has thought a lot about these issues and is clearly an expert space.

And I think it’s important to stress, if we’re going to win over folks to this idea, we need to do so respectfully. For people who disagree with us, challenge them, but do it in a way that’s not the meaning or patronizing and actually prompt a real conversation.

Owen: Yeah, and just to add on to that: it’s impossible to know how much of that response was fueled by the fact that she’s a woman, but just based on what we know about the world, I think we can assume at least a little bit of it. So I would just ask basic income advocates and anyone else to just be sensitive around those issues and to give people their due respect.

Jim: Absolutely. Well, thank you for listening to this episode of the Basic Income Podcast. Thank you to our producer Erick Davidson. If you like what you hear, please do make sure to rate and review us on Apple Podcast or the podcast service of your choice, and please do tell your friends. We’re always looking for new listeners. We’ll talk to you next time.

A Basic Income Presidency, feat. Presidential Candidate Andrew Yang

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The Basic Income Podcast

A Basic Income Presidency, feat. Presidential Candidate Andrew Yang

00:00 / 30:51

What would it take to truly prepare the U.S. for the potential of widespread technological unemployment and invest in people in a way that allows them to really reach their potential? These questions and some novel answers inspired Venture for America founder Andrew Yang to run for president: he is a declared candidate for the 2020 election. Jim interviewed Yang at an event in San Francisco on his candidacy, vision, and the political path forward for basic income.

UBI and the Values Embedded in our Social Safety Net, feat. Almaz Zelleke

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The Basic Income Podcast

UBI and the Values Embedded in our Social Safety Net, feat. Almaz Zelleke

00:00 / 25:33

To understand our current anti-poverty measures and the full impact of a basic income, we need to understand the values and assumptions embedded in the safety net right now. In this episode, Owen discusses these issues with Almaz Zelleke, Associate Professor of Political Science at NYU Shanghai, who is working on a book on the ethics of basic income in the U.S.

Is Basic Income a Bipartisan Policy?

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The Basic Income Podcast

Is Basic Income a Bipartisan Policy?

00:00 / 20:12

We hear a lot about basic income having bipartisan support, with Dr. Marin Luther King, Jr. and Milton Friedman frequently cited together as supporters on opposite sides of the aisle. However, there is also a counter narrative that suggests the progressive and libertarian visions of basic income are too different to be reconciled. In this episode, Owen and Jim delve into how basic income appeals to a politically diverse coalition and how it doesn’t.

Analyzing Basic Income Models in Washington DC

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The Basic Income Podcast

Analyzing Basic Income Models in Washington DC

00:00 / 34:02

The District of Columbia recently commissioned a study on various ways to address poverty, including a negative income tax and a minimum guaranteed income. Jim and Owen spoke with DC Councilmember David Grosso, Council Budget Director Jen Budoff, and the two primary authors of the study, Susanna Groves and John MacNeil, to discuss the findings of the study and its implications.

Fair Shot: Rethinking Inequality and How We Earn, featuring Chris Hughes

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The Basic Income Podcast

Fair Shot: Rethinking Inequality and How We Earn, featuring Chris Hughes

00:00 / 24:35

This week’s guest is Chris Hughes, cofounder of Facebook and the Economic Security Project, and author of the recently released book Fair Shot: Rethinking Inequality and How We Earn. Chris discusses how he came to recognize the power of cash transfers, and his experience going from growing up in a low-income family to becoming very wealthy through Facebook. He also lays out his plan to provide financial security to every working American.

Economic Analyses of Basic Income, featuring Rakeen Mabud

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The Basic Income Podcast

Economic Analyses of Basic Income, featuring Rakeen Mabud

00:00 / 11:30

How would universal basic income impact the economy? The Roosevelt Institute has done numerous analyses on how unconditional cash transfers could affect the economy at various levels and program designs. Rakeen Mabud, Program Director of the Roosevelt Institute, joins the podcast to discuss these analyses and what they mean for the wider basic income conversation.

How UBI Was Added to the California Democratic Party Platform, featuring Rocky Fernandez

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The Basic Income Podcast

How UBI Was Added to the California Democratic Party Platform, featuring Rocky Fernandez

00:00 / 18:50

Two weeks ago at the annual California Democratic Convention, the party adopted a new platform that includes universal basic income as a policy it supports. Rocky Fernandez, Region 5 Director for the CA Democratic Party, joins the Basic Income Podcast to discuss how this happened and what it means for basic income in California.

Why Basic Income Advocates Should Defend SNAP, featuring Jess Bartholow

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The Basic Income Podcast

Why Basic Income Advocates Should Defend SNAP, featuring Jess Bartholow

00:00 / 22:17

Jess Bartholow of the Western Center on Law & Poverty joins the podcast to discuss the Trump Administration’s proposal to cut SNAP (aka food stamps) and replace some cash benefits with a food delivery program. Bartholow discusses the research on SNAP and why basic income advocates should oppose these changes.

An inside look at the UK Opportunity Fund, featuring Anthony Painter

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The Basic Income Podcast

An inside look at the UK Opportunity Fund, featuring Anthony Painter

00:00 / 24:43

Basic income made headlines last week with a proposal by the Royal Society of Arts (RSA) to create a United Kingdom Opportunity Fund, which would pay unconditional cash to all British residents under 55. Anthony Painter, Director of the RSA Action and Research Center, joined Jim and Owen to discuss the proposal and the state of politics around basic income in the UK.

Basic Income Speculative Fiction, featuring Sandra Haynes

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The Basic Income Podcast

Basic Income Speculative Fiction, featuring Sandra Haynes

00:00 / 18:37

Jim interviews Sandra Haynes, winner of “Into the Black”, a speculative fiction contest on basic income, held by the Economic Security Project. Sandra’s story imagines an Artificial Intelligence created to study emotions of people using bank ATMs, which becomes conscious while trying to determine why it keeps seeing people cry. We hear about what inspired this story, Sandra’s thoughts on basic income, and a little bit of the story itself.

What Basic Income Will and Won’t Solve

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The Basic Income Podcast

What Basic Income Will and Won't Solve

00:00 / 16:44

Basic income advocates often talk about what a transformative impact universal basic income could have on society — but what issues and challenges will it actually solve? Jim and Owen share their thoughts on whether basic income is the solution to poverty, automation, wealth inequality, and more.

——

Episode Transcript

Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.

Jim: And I’m Jim Pugh. We are here with you today with a discussion episode.

Owen: So, we’re going to be going through a number of different high-level issues and asking ourselves and each other “does basic income solve that issue?”

Jim: I think this is something that we touch on often in conversations on basic income, covering what areas basic income might make a big difference in peoples lives, but Owen and I were talking and really thinking that there hasn’t been a clear discussion on, for specific areas: Is basic income actually the answer to this problem? Is it not the answer? Is it part of the answer? And so, we thought it could be good to just really talk that through in a number of different directions.

Owen: So, let’s jump in. First one. Jim, would you say basic income solves poverty?

Jim: I would say partially. What about you?

Owen: I said yes. Alright, you go ahead. [laughing]

Jim: The reason I would say partially is that I, when talking to people, I typically say, basic income solves absolute poverty. This idea that, I mean there are people out there who are in destitution, who can’t afford their basic needs, and that if they were getting unconditional cash every month, they could. And so, in that respect, yes.

The reason I said partially is because if you’re talking about actually eradicating poverty, I do think there’s more to it than just making sure that people can cover their needs on an ongoing basis. If you look at social work and what it means to have a pathway out of poverty, there are more steps to that. There’s understanding the language of the middle class. A great book that was recommended to me recently is “Bridges out of Poverty,” and it actually talks about some of the barriers that we don’t even realize are there a lot of the time.

And so, I think that I see basic income providing that floor, which is a necessary step to get out of poverty and to keep people from falling into destitution. But I actually think we will need more than that if we want to have everyone fully included in the economy.

Owen: Yeah, I guess I was thinking partly just on a strict definitional level. If you can get above the poverty line, you are technically out of poverty. But, going a little bit further than that, the sorts of effects you see with cash transfer programs are the resolving of the symptoms of poverty. People have better educational outcomes, better healthcare outcomes. So that starts to convince me that the problem is lack of cash and when you provide cash then, maybe not all your problems are solved, but the damage done by poverty itself starts to heal up.

Jim: Yeah, I think that’s a good point, and an important thing to note is, if we’re talking about multi-generational effects, then maybe basic income does solve it. Because if you know the children are growing up with enough money to cover basic needs, maybe that could be enough to break the cycle of intergenerational poverty on its own.

Owen: Yeah. And you do see some positive effects on long-term earnings just with some cash transfers, some cash stipends.

Jim: Alright. So next up on the list is wealth inequality. Owen, what say you?

Owen: I said it takes a little of the edge off, but no.

Jim: I also said no.

Owen: Yeah. What I mean by that is basically it helps deal with the lowest ends of poverty but unless you’re just doing a truly aggressive Robin Hood-style taxation system, the rich are still going to be super rich. The poor are still going to be pretty poor.

Jim: I think something that gets missed sometimes, both among basic advocates thinking that suddenly all that will somehow go away, and I think it’s also a big concern that people who are skeptical of the policy have, is that if the proponents are adopting that more utopian perspective on what it will accomplish, that we may miss what else we need to do in order to deal with the other issues in society.

But, yeah, if you look at the situation we’re in, it is what? Eight people in the world have as much as the bottom half together? Giving everyone basic income in no way, shape, or form is actually going to have mostly equal amounts.

But, I said no, but I do think it’s worth pointing out that the more we can provide people a pathway to inclusion in society, the more opportunities that we can be granted. And so, even if we’re not directly addressing wealth inequality, maybe we can be increasing economic mobility, which means that more people have a chance to accumulate wealth over time.

Owen: Yeah, and if you start to think about, “ok, well, why is wealth inequality bad?” And, I’m not going to jump down that rabbit hole, but yeah, some of that starts to get a little better. And we usually don’t talk about the more utopian dreams of basic income where it’s not just $12,000, but $25,000, $30,000, something like that, $30,000 a year per person, which feels far enough down the future that its not even worth talking about, but that’s maybe where you would start to say “ok, this is starting to solve wealth inequality.” But we’re focused on 12 or even less right now.

Alright, Jim, how about automation?

Jim: I’m going to say “partially.” I honestly debated between “no” and “partially,” because I think, we’ve talked about this before, but if we actually end up in a situation where most jobs have been automated, and there really isn’t enough work for everyone, just giving people enough cash to survive is not, nowhere near a sufficient solution.

That, again, it makes sure that people don’t starve, but work has been so central to giving meaning to peoples’ lives that we actually need to think about what are some other changes to the way we approach our lives. And this doesn’t necessarily have to come from the policy world but, if we’re in that world, there’s a lot of rethinking we’re going to have to do, and basic income, I think, is necessary, but it won’t be sufficient.

Owen: Yeah. I’m in the same place. And even beyond just finding meaning in your life, if your making whatever — $60,000 a year — maybe driving a truck, to use the classic example, and your job gets automated away, and you have trouble finding work, but you’ve got $12,000 a year, you’re not living the same life. And especially, let’s say you’re in your fifties and your job goes away and you’re having a hard time finding a new job, now we’re talking about living on a basic income indefinitely, and the amounts we talk about just aren’t sufficient to solve the problem.

I think it’s something. It’s better than nothing. That’s why I said partial. Right now, you get six months of unemployment and then your kind of on your own. So, it’s better than that, but it’s certainly not everything.

Jim: Next up on the list, we had “problems with the social safety net”.

Owen: So, I said partial, and that’ll require some more explanation, but what were you thinking?

Jim: I said, it depends, but you go first.

Owen: Yeah. This might be similar answers here. So, first of all, what problems are we referring to with the social safety net? There are the issues surrounding bureaucracy where maybe some people who qualify for various means-tested benefits don’t end up receiving them because they don’t know that they qualify or maybe they chose not to fill out the paperwork, or they’re made uncomfortable by the paperwork. And, then the paperwork itself creates a ton of bureaucracy that is not particularly helpful to society beyond creating this filter where some people get benefits and some people don’t.

And, then there’s the issue that whenever your means testing, you’re probably leaving out some people who are needy in the same way but aren’t receiving those benefits. And also, for some, there’s a work disincentive. As you earn more money, the benefits phase out and so there’s an effective tax on your earnings, at least for a while.

So, does basic income solve those? It could, but if you are just eliminating all those other programs and replacing them with a basic income, you’re probably creating a lot more problems and probably hurting a lot of the people who do benefit from those programs. Because for all the issues with things like the Earned Income Tax Credit and anything else you could think of, unemployment insurance, they do keep a lot of people out of poverty. They do a lot of the things that basic income is good for. And those are the people who are most in need.

So, yes, on one level basic income doesn’t have those issues, but it is not targeted, and so it’s maybe creating other issues that those programs address.

Jim: The reason I said depends, and I think, yeah, we share a lot of perspectives on this. I think very much the type of basic income you enact is going to matter a great deal on this front. We’ve talked about this before, but if you actually were pursuing a basic income that got rid of all the programs that we had today and just gave people cash, then no, that definitely does not solve it and perhaps makes it even worse just because some people you may leave far worse off than they are today.

If instead you had a basic income in addition or as a supplement to what we have now, providing that universal floor that really acts as a backbone, and again, it won’t solve absolutely every problem, but that could make a world of difference as far as actually ensuring that people are getting the support they need beyond what exists today.

Owen: I’m totally with you on that. I do think there are programs we might eventually think about cashing out down the road if they’re proven to be pretty much redundant with the basic income. But, I would want to see the evidence for that in reality as opposed to just what we think.

Jim: Let’s not start a discussion on getting rid of the social safety net until we actually have something clearly better.

Owen: Yeah. Right. Ok. So, Jim, does basic income solve healthcare?

Jim: Big fat no for me on this.

Owen: Yeah. Same.

Jim: Yeah, I don’t see too many proposals for it out there, but there are some people who have talked about basic income as a replacement, not only for a lot of the general means-tested programs that we have today, but also for all government assistance on healthcare. And I think that would be pretty disastrous. Why don’t you share your thoughts?

Owen: I’m pretty much in the same spot there. If healthcare was something where it was like your rent or something, where you just needed to pay a little bit on a regular basis, and it was predictable, and then you were good, healthcare was solved. Then ok, that’s kind of what we’re talking about here. But obviously healthcare’s nothing like that. It’s something where maybe you have your annual check-up, but it comes in big, giant spurts when you actually need it, and its unexpected, and you can’t really plan for it beyond having insurance.

Jim: Yeah. My perspective is that we really should be aiming for a single-payer system. We see with Medicare today, that’s actually an incredibly efficient government program. The overhead costs on that are very, very low, far lower than private insurance, and it’s actually providing people with quality healthcare. So, we already know something that works well here. And we see examples in other countries of how effective that can be, so rather than trying to fit a square peg into a round hole with using unconditional cash for this, let’s actually go with what works.

Owen: Right. And part of the reason that it works as well as it does, Medicare-For-All type systems, or Medicare itself, is that you have more bargaining power if you are the government. If your negotiating prescription drug prices say, and you represent millions and millions of patients, that’s excellent bargaining power. Whereas the more segmented it is, the higher those prices go.

The last one we have on the list: “does basic income solve housing affordability?

Jim: So I said, in some places.

Owen: I didn’t write down a simple answer to this. I said, probably more than it gets credit for but, I guess partial would be my one-word answer.

Jim: I think my perspective on this ties back to what we were talking about last week or two weeks ago around the dangers of inflation on basic income. I think if you could enact a basic income and knew that housing costs are the same, then it doesn’t solve it completely, but it makes a big difference.

I think the trick with housing is that you end up with such odd geographical effects. We see this first-hand here in the Bay Area because the housing supply is so much more limited than the demand is for it, and so you end up with these exorbitant rents. And you could imagine, basically it’s distorting the market, and so with a distorted market, it’s hard to know exactly what will happen.

And so maybe we would have some weird effects where prices could go up significantly if people were getting a basic income, but based on the evidence from the study that was run in Mexico that we talked about previously, when you do have a market for goods, it seems like providing people with extra cash doesn’t cause inflation. So, anywhere where you actually had enough supply and demand on both sides, probably that extra cash is going to really make a difference for people.

Owen: Right. I think some people assume if everyone gets $1,000, landlords just like en masse raise the rent $1,000, and they just soak it all up. And, yeah, you could imagine situations where that could happen. But I think, it’s not like there’s a big, I don’t know of a landlord secret society where they can all collude like that.

And so, yeah, if you’ve got a good market, I think you’re ok. In a crazy distorted market like the one we’re in, in the Bay Area, I think the forces that are causing that distortion are a lot bigger, in some cases, than the basic income would be, and so in some markets around here, I don’t think you’d really see it.

I think you’d really have to watch for it in limited-supply, low-income housing, where the people providing those have a sense of how much money their tenants are taking in on a regular basis and would be able to adjust based on that. So, I think you would need kind of some parallel laws around protecting those renters.

Jim: Alright. That was everything that we decided to cover for this episode. One thing that came to mind as we were talking through this is a quote from my colleague Sandhya Anantharaman, the other Co-Director at the Universal Income Project. She had said at a conference recently that “basic income doesn’t solve every problem, but it makes every problem easier to solve.”

I think there’s a lot of truth to that. I think that so much of what we’re struggling with in society, you can trace back at least aspects of it that stem from people being in absolute poverty. And basic income really does make a difference there.

Owen: Yeah, and that’s what I find most heartening about the research that we’ve seen from various basic income studies. It isn’t just, you’re out of abject poverty, but everything else is the same. You do see a lot of improvement in a lot of other fields. And you also see it in our answers which were partial to almost everything. “No” on healthcare. I said “yes” to poverty, but it’s sort of a modulated “yes”. So yeah, having a little more money makes a lot of life a lot easier. But you still have your life. You still have your problems.

Alright, thank you for listening to the Basic Income Podcast! Please subscribe on Apple Podcast or the service of your choice. Also, if you could take the time to leave us a rating or a review that helps other people find the podcast as well.

Thank you to our producer, Erick Davidson, and we’ll see you next week.

Y Combinator’s Basic Income Study, featuring Elizabeth Rhodes

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The Basic Income Podcast

Y Combinator's Basic Income Study, featuring Elizabeth Rhodes

00:00 / 22:16

What’s the latest with the basic income study piloted by Y Combinator Research? Jim and Owen sat down with Research Director Elizabeth Rhodes to find out. Rhodes shares insights from the initial pilot in Oakland and the much larger upcoming experiment. Rhodes details the goals and methods of these exciting, important studies.

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Episode Transcript

Owen: Hello, and welcome to the Basic Income Podcast! I’m Owen Poindexter.

Jim: And I’m Jim Pugh. One of the biggest developments in the last few years in the basic income space was the announcement by Y Combinator Research that they were going to run a pilot on the topic of basic income, to actually better understand what it looks like for people to receive unconditional cash. This happened just about two years ago now, and it really helped to kick off the conversation around basic income in the United States.

Owen: So, today, we’re very fortunate to have the person leading that effort at Y Combinator Research. So, welcome to the podcast, Elizabeth Rhodes.

Elizabeth: Thanks. It’s great to be here.

Owen: So, why don’t you start off by just telling us a little bit about your background as a researcher and how you came to Y Combinator Research?

Elizabeth: When I first heard about the job posting I was finishing up my dissertation at the University of Michigan. My background is in social work and political science, and I have been involved in poverty research both as a social worker and in terms of policy on the political science side.

I have worked a lot with the existing social safety net, both domestically and abroad, and pretty early in my graduate school time I did an independent study with a Professor and a colleague and we were sort of thinking outside the box on poverty, anti-poverty strategies, and we read, even it was actually Milton Friedman’s first discussion of the negative income tax. And, we sort of reconsidered what that might look like now. And that was my introduction to the topic.

I had definitely not heard of the movement for universal basic income. It was more just a guaranteed minimum income in more of the negative income tax model. So, we had written a paper on that and calculated what it would cost to implement a negative income tax now at different levels and different marginal tax rates.

So, I was really interested in the topic and then when I heard, someone forwarded around the political science department in Michigan, actually Sam Altman’s announcement that YC Research was looking to do a study and I jumped at the chance. It was no one else. And people would talk about the idea but no one else was really willing to take the risk and invest in this idea that is pushing the envelope I guess in a lot of ways.

Jim: Now, Y Combinator Research and the basic income project in particular, is a pretty new thing for Y Combinator, which is a start-up accelerator. So, can you tell us a bit more? What was the motivation here? What were the intended outcomes? What were the goals of this effort?

Elizabeth: So, Sam Altman who is the President of Y Combinator had, YC was established to promote innovation and a lot of that can happen in for-profit through start-ups, but there’s a lot of questions and societal level problems that shouldn’t be addressed. Either they shouldn’t, because no one company should develop this certain particular idea or have control of it, or they’re too long, they’re not suited for profit, and so that’s what gave him the original idea for YC Research.

And, the first group within that was Open AI which is seeking to develop generalized artificial intelligence in an open source, not for profit environment. And I think he began to then think about what other types of questions like that do we want to tackle and with Open AI and with what automation might lead to got him thinking about basic income.

He also talked about the YC model in some ways as a basic income for founders at the beginning of launching their start-up. So that’s where this particular idea came up. Right now, there’s a group of independent projects, working under the banner of YC Research.

Owen: So, given this general interest in basic income, how did you go about designing the project that you’re now working on to achieve those goals?

Elizabeth: So, it’s been a difficult and a long journey in a lot of ways because there’s so many questions that we have, and there is so much interest in basic income. And so I think we started at the most general questions, these really broad, like what would universal basic income look like? How will it affect people? And then we pulled together large groups of academics and policymakers and had these day long workshops and conferences talking about “well if we’re going to operationalize this into a study, like a very concrete study where we can ask very specific questions.”

You know there were a lot of decisions that had to be made at the onset. Things like, do we saturate an entire community, do a more geographically dispersed randomized controlled trial. And we just met with a lot of different people and talked about, you know, there’s not only financial concerns with the cost of such a project, there is the ethical concerns about, you know, you’re giving people a lot of money and you’re potentially changing not only individuals’ lives but the social context within communities and there were just a lot of things. You know, how does it work with the existing safety net and existing policy?

There’s been so much to think about and so I think it was really kind of a, I think people expected us to launch really fast, but there’s just been this process of figuring out what can we do? What other questions we can answer and refining slowly into coming up with a study design that we feel like we’ve landed on.

We believe that its definitely a foundational study. It’s not gonna answer all the questions we have about basic income, but it is going to provide a foundation about how this affects individuals moving forward and we hope that there’ll be a lot of exploratory outcomes thinking about helping identify areas for future research and hope to continue pushing the research agenda forward.

Jim: So, speaking of doing upfront legwork to make sure you’re properly prepared, you’ve actually approached this in multiple phases, and you’ve already been running a pilot program in Oakland where you are giving people cash in advance of a larger experiment. So, can you tell us a bit more what that pilot program was? Who was involved? What was happening with them? And what that experience was like?

Elizabeth: Sure. So, before we even started anything we actually talked with some of the people that ran the negative income tax experiments, which is the most recent version of something similar to this. This was back in the sixties and seventies, and they were really criticized for a lot of reasons.

So, we actually talked with them and said “ok, how do we not repeat the mistakes of the past?” And one of them was to make sure to run pilots, to test these things out. There was a big push then to just get started and you’re not able to think through all of the consequences, everybody makes mistakes. So, we decided to do several phases of a pilot actually because we realized we could iterate and learn as we go.

So, I guess it was a year ago in August, we launched a small feasibility study. It ran for one year. It had only six people, which gave us a chance to work very closely, and it was just, at this point, when I started, it was just me and one colleague. So, we were kind of working on everything ourselves.

Half of them received $1500 a month for the full year, and the other half received a smaller sum, a nominal amount of $50 to thank them for participating, and it was really interesting to watch. Obviously, we randomly selected these people from Oakland. They were all lower income residents and spent a lot of time with them. We didn’t know in a lot of ways what all the potential pitfalls were and so we were able to learn, they were really great and willing to share their data, so I think we learned a couple things from that. I’ll talk a little bit more about some of their experiences, but I think we learned a couple things.

We learned that it’s possible to do this. That people were willing to provide their data and share their stories. We can only learn if people are willing to share that information and they were eager and willing. If we didn’t send out a survey, they would contact us and be like “hey can we do this?” So, they were willing to share a lot about their lives.

We also learned that even with a really small number of people, it was interesting to see what transpired over the course of the year. It’s certainly not a basic income. It’s very short-term defined cash. But just that security that it provided, did. It allowed someone who was kind of couch surfing between friends and family, working a part-time seasonal job to actually move out to Antioch, where she was able to get an apartment with a group of people and started working a full-time, like much more steady job. There was a student who was able to work fewer hours at like fewer part-time jobs and focus more on school and giving balance in their life and figuring out what they wanted to do next.

So, there’s just so many different ways that it can influence people, but I think we will just, in those six we’ve learned so much, and I’m really excited to see what happens with 3000 people. So those indivduals are actually still participating and receiving smaller amounts of money.

So, we’re launching now, this is our second phase of the pilot, where up to 100 people still in the Oakland area, they’ll be receiving smaller amounts of money. It’s less about what does a basic income do, but more about operationally, the process of distributing payments of collecting data of recruiting. So, we’re refining those. We’ve learned a lot with six and now we’re learning more. We’re working with a national survey research firm that’s helping us implement the entire study and so they’re getting involved now too.

So that’s our last pilot phase. That’ll probably run for another six months to a year. But hopefully we’re planning on later this year launching a larger 3,000-person randomized control trial across two states.

Owen: So, we want to get into that in a moment. I’m curious if there’s any pitfalls or things you learn not to do either from talking to the people who are studying this in the sixties and seventies or from your pilot studies in Oakland?

Elizabeth: From the sixties, I think one of the things that came up there was they were really looking at a macro level — they wanted to see if you give people money do they work less. That was the real concern, was the labor market response at that time.

But the study that they designed wasn’t really actually able to measure that because it could only look at a demand side response – do these people work less? But it’s not if everyone gets this and everyone has a floor, this injects money into the economy of people who are likely to spend it. Does it create more demand for jobs? Are people able to say, “well, I don’t wanna take that job because I have this floor” and wait till they find a different job and what does that do to wages. Also, it was a very short-term study, and, in some ways, it was like an opportunity for leisure as some have talked about.

So, one thing that we wanted to do first is say “ok, we wanna make sure that the questions we’re asking we can actually answer with our study.” And that’s why we really are focusing on what are the effects of this unconditional cash monthly over a three- or five-year period on individuals and their families and those in their network. We’re not going to be able to identify what happens to the entire community or what happens to prices or what happens to rent levels and things like that. But we are able to say “ok, how does this affect individuals?” “How does it affect the decisions they make? The opportunities they have? Their spending patterns? Their well-being?” All kinds of different things like that.

Jim: So, you mentioned that hopefully this year you’ll be launching this much larger experiment. Can you tell us more about that? Who is involved? What is the process going to look like? How will you actually run this?

Elizabeth: So, we have developed a proposed design that’s actually available on the website. We’ve shared it with, we’ve gotten feedback from probably hundreds of academics and policymakers. We’re still modifying as we continue to learn from the pilot, but we’ve partnered with universities. We have another group of academics, David Broockman from Stanford, Sarah Miller from the University of Michigan, and Eva Vivalt from Australian National University are working very closely with me. We’re the four PIs and we have a growing group of eight or nine senior academics who are advising and overseeing the project.

As I said, we have partnered with the Center on Poverty and Equality at Stanford. We’re partnering with Poverty Solutions at the University of Michigan. It’s not something we’re doing in isolation obviously. And we are working with a large national survey research firm that works on these kinds of experiments they’ve done, Moving to Opportunity 8 years ago and things like that. So definitely helping with the implementation.

So right now, we are actively fundraising and applying for grants and things like that and continuing with the pilot in preparation for, as I said, hopefully later this year, and we have a design that includes 3000 individuals, 1000 of whom will receive $1,000 a month. Most of them for three years and a smaller group for five years.

Owen: And can you speak to the specific data that you’ll collect?

Elizabeth: We are collecting a fairly wide-range of data, and there’s a couple different sources. One is administrative data which is data that the government collects on things like IRS earnings and that kind of reports. There’s some health data. There’s some use of existing benefits. For kids, there’s school attendance and all that kind of thing. So, with permission we’re actually, the project is overseen by the Institutional Review Board at Stanford, but with individuals’ consent we’re able to collect that data so that is sort of passively, they don’t have to stay in touch with us, we’ll be able to collect outcome long-term on some of these measures.

We also, we’re doing in-person surveys at enrollment and then midline and then end line. We’re also doing shorter web-based mobile surveys, maybe monthly, to collect data on some things that we need repeated measures or if there’s a lot of problems with recall.

And then a large group of people, probably about 200 of the recipients, will be followed much more closely for qualitative interviews. So, I’ll sit down with them open ended, really trying to understand their experiences. I’m trying actually not only like what are the effects of the cash but then why? What are the pathways? And what are the constraints people still face or how could the design be better or be more helpful.

And the outcomes themselves range, it’s a fairly holistic study. I think a lot of people as I said, in the past it’s been very much focused on “do people work or not work?” And that’s something we’re collecting data on, but it’s much more broad. I think, how do people spend their time in general? There are so many other productive uses of time just besides the paid labor or that they’re caring for a child or elderly relative, or they’re starting other businesses, or how do people spend their time?

We’re looking at financial health and measures of resilience. So not only, yes, they have a steady stream of income, but then if they face an unexpected expense would they be able to cope without filing for bankruptcy and things like that. We’re looking at lots of measures, health related measures. Not only outcomes but also service utilization and mental health outcomes which a lot of other studies, like lottery studies and the Earned Income Tax Credit, have all had very positive effects.

We’re looking at subjective well-being and measures of self-efficacy and locus of control and how does this affect well-being more broadly. Because I think those types of outcomes really have a long-term effect on all these other outcomes we’re looking at, and how does this minimal level of security, in what ways does this affect well-being and outlook?

Jim: I know that in some of the studies that have been done in developing nations around cash transfers, one of the aspects that’s been explored is context setting around giving people cash, and if it’s presented, it can be the same money and there could literally be no conditions, but if it’s described in a different way to people, and there’s been exploration as to how that description actually then has an impact in what ultimately happens to people. Is that something that will be either actively included in the experiment, or will there be some ways to do analysis around that?

Elizabeth: There will. So, in order to have, I don’t wanna go down the rabbit hole of statistical power, but in order to be able to really detect effects, we can’t have too many treatment arms. So, if we give people lots of different amounts of money or change the way it’s framed a lot of different ways, it’s a lot harder.

We want to focus on really more of what we call heterogenous affect. So, looking at how it affects people across different income levels and gender and things like that. So, we’re having a uniform across everyone framing. But, having said that and partly because we aren’t the government, we can’t, we’re a non-profit organization and researchers and there’s only so much that we can do. I mean we don’t want to deceive anyone in that way, but we want to understand how people view the money.

And, so, certainly part of the analysis is figuring out and there’s a lot of questions related to government, like really trying to dive into that because I think it does make a huge difference even in, I mean, as we talk about if this is viewed as a stigma, like just a welfare program versus this universal human right, it can have a very different effects. And so that’s something we want to explore through the analysis.

Owen: What are you personally curious about in terms of how this plays out?

Elizabeth: I think a lot of things. I think for me that level of security, having worked a lot in the existing system and knowing, like people just week to week, or even month to month, it’s a constant struggle and it’s inability to plan for the future or think about the future, because it’s just constantly “well, how am I going to pay my bills this week or this month?” And that stress just completely wears people down.

And so I think this would apply a lot across the income level, but I think specifically I’m really interested in seeing how that $1,000 a month is not, you know, a ton of money, but it does provide this level of security and how does that change peoples’ lives and their relationships? And I’m just very eager to learn, just to hear their stories and to, not just the data but just really on a very basis level, how does this affect so many different aspects of their lives?

Jim: So, you mentioned that the plan is to launch this experiment this year. I know at Universal Income Project we often have people curious, first curious about what’s going on but also curious about being involved in some way. Is there a way for members of the public to somehow be involved in this effort?

Elizabeth: Yes, so I mean one of the things, it’s taken us a while I think, the study was announced and then we kind of went underground, and it’s been a, you know, people are like “oh, it’s being secret” and I think that was never the goal. I think, we just wanted to figure out what we were doing before we start talking about it.

There are certain aspects of this. We’re gonna be extremely transparent with exactly what we’re measuring. How we’re measuring it. Every detail of the plan. You know, how we’re gonna do the analysis is all gonna be available except things like locations and protecting the privacy of participants is like our absolute first priority and so people cannot say you know “can I interview someone?” You know, protecting that privacy. But beyond that, you know, we’re gonna be very transparent.

So, in terms of following, we’re still trying to figure out framework. We have a website, whether it’s blogging or how we’re gonna be sharing that and sharing updates up on the research. Certainly, we are actively fundraising, so anyone who you know wants to contribute to the effort can do so through our website. This money is going, one to one, like 100% directly to individuals. Giving people $1,000 a month for three and five years is pretty expensive so it’s something we continue to raise money for. But we want people to be involved and share the information as much as we can.

Jim: Is there a website URL you can share for folks?

Elizabeth: Sure. It’s YCR.org/basicincome.

Owen: Thank you, Elizabeth Rhodes, for joining us on the podcast.

Elizabeth: Thanks so much for having me.

Owen: That was Elizabeth Rhodes on the basic income podcast. I’m very excited to see where this data goes. I think it becomes a lot more tangible to people, what cash transfers can do when you see things like kids stay in school longer, there’s some positive outcomes with health, and that’s a lot easier for people to grasp than they had more money, and it made their lives better.

Jim: Definitely. And I find it really encouraging to see them taking time to develop such a thoughtful approach to the experiment. They’re really thinking about what is the right way to execute this, taking the time to do the pilot in advance in order to assess logistics and really thinking through what it is they’re actually measuring here, what are the outcomes their going to be looking at.

That’s some pretty sharp contrast to the negative income tax experiments that were run in the sixties and seventies. Granted, these were amongst the first controlled experiments around policy that were done, but it was pretty muddled as far as what they actually were looking to assess through those, and I think as a result you saw people didn’t have clear takeaways. And we have our interpretations now, but it really wasn’t clear conclusions that could come out of that in a way that, to your point, could be really valuable to understanding how and if we move forward with the policy.

Owen: Yeah, and with the sixties and seventies ones there were at least some, it seems like some people had an agenda in how they wanted to interpret the findings. And it was easy enough to project an agenda.

Jim: I’m sure we’ll still have people with agendas now. Hopefully if it’s more clear from the start, it’ll be more difficult to derail that.

Owen: Right. And there’s a lot of quantitative data that they’re gonna collect which I’m excited to see. And I’m excited to see the qualitative data. I lean toward the quantitative because its immutable in some ways, but a lot of the real benefits come from reduced stress and just people knowing a little more about their future financially.

Jim: Alright. That’ll do it for this episode of the Basic Income Podcast. Thank you to our producer, Erick Davidson, and if you like what you hear, please do make sure to rate and review us on Apple Podcast or the podcast service of your choice and let your friends know about this. We’re always looking for new listeners. We’ll talk to you next time.

Basic Income Q&A: Inflation, Predatory Lending, and the Meaning of Work

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The Basic Income Podcast

Basic Income Q&A: Inflation, Predatory Lending, and the Meaning of Work

00:00 / 16:54

Jim and Owen take listener questions on some of the most common topics that come up around basic income. Will inflation eat away many of the benefits? Will we need to regulate predatory lending? How will labor rights change? And what does basic income mean for the future of labor and the identity we place in our work? Keep the questions coming by sending them to the Universal Income Project on Facebook, or to Jim (@dr_pugh) and Owen (@owenpoindexter) on Twitter.

Basic Income and the Disabled Community, feat. Annie Harper

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The Basic Income Podcast

Basic Income and the Disabled Community, feat. Annie Harper

00:00 / 20:17

How would a basic income impact the disabled community? We delved into this question with social anthropologist Annie Harper of the Program for Recovery and Community Health, Yale School of Medicine. Harper, who works with mentally disabled people, describes the hopes and concerns a basic income offers.

Human Profiles of Economic Insecurity, featuring Rachel Schneider

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The Basic Income Podcast

Human Profiles of Economic Insecurity, featuring Rachel Schneider

00:00 / 21:05

We often talk about economic insecurity at the statistical level, but how does it impact people’s lives day to day and month to month? Rachel Schneider and Jonathan Morduch examined this question by getting to know families who struggle with financial security, and chronicled their findings in the eye opening book The Financial Diaries: How American Families Cope in a World of Insecurity. Schneider spoke with Jim and Owen about her findings and the sacrifices people make for financial stability.

Basic Income at the City Level, Featuring Mark MacKinnon

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The Basic Income Podcast

Basic Income at the City Level, Featuring Mark MacKinnon

00:00 / 24:20

How would a basic income within a city affect how that city operates? To delve into this question, Jim and Owen spoke to Mark MacKinnon, City Councillor in Guelph, Ontario. The conversation ranges from the effects a basic income could have on local businesses to how the political appetite might change for other city improvements. MacKinnon also touches on the basic income pilot that just began in three cities within Ontario.

Basic Income Q&A: How to Pay for It, Which Country Will Go First, and More

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The Basic Income Podcast

Basic Income Q&A: How to Pay for It, Which Country Will Go First, and More

00:00 / 20:01

Jim and Owen answer listener questions from how to pay for basic income, which country will implement a basic income first and how we will get there. You can send your questions to the Universal Income Project on Facebook or Twitter, or tweet at Owen (@owenpoindexter) or Jim (@dr_pugh).

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Episode Transcript

Owen: Hello and welcome to the Basic Income Podcast. I’m Owen Poindexter.

Jim: And I’m Jim Pugh.

Owen: A while back we asked you for questions about the basic income, and a number of you responded. In this episode, we are just going to go through a few of those.

Jim: Unfortunately, we’re not going to be able to get to everyone’s question, but we did have a few that we thought would be good ones to start with. Here goes.

Owen: Alright. The first one is from Abigail Irwin, it came in through Facebook, “Here is the one big question I keep getting: how is it going to be funded?”

Jim: I would say for me as well, this is a question that people ask all the time. Since we’re talking about such a big program, people are naturally curious about, “Alright, where does the funding come from here?” One thing that I’ve mentioned before that I think is really important to remember is a lot of the conceptions we have right now about what the government “can or cannot afford” are really not based on reality.

That if you look at our economy and how much it’s grown over recent years, there’s actually so much money out there. Our Gross Domestic Product over the last 15 years has grown by four trillion dollars. Just taking a big picture snapshot, it’s important to know that there is money out there.

Owen: Yes and on top of that, I’ll say that while I think it’s important to talk about how are we going to pay for things, the government is very willing to drop billions of dollars on some programs without having this discussion. It’s only around new big programs where we do say, “Okay, well, where is that money going to come from because we haven’t already baked that in.”

Jim: We do see often around things like military spending, spending tens of billions of dollars ready at the drop of a hat is not uncommon, but as soon as we talk about billions or even hundreds of millions of dollars for social programs, people suddenly get very nervous about how we’re going to actually afford that.

Owen: And getting more into, “okay, how is it going to be funded?” — obviously, there are a number of ways you could do it. If you structure it as a negative income tax, you could just have a tax that runs backwards essentially. At a certain income level, you receive money instead of pay money in. That’s one way to do it where you don’t have to touch anything else.

Jim: Something I would add to that is, with negative income tax, one concern that I know people have is that if you’re actually not giving the same amount to different people, that could complicate the logistics figuring out, “alright, how do we actually assess someone’s income in the moment and decide alright, how big is the check we mail to them?” You can actually accomplish exactly the same thing using the tax code. You can structure it so that you give everyone the same amount of money every month regardless of how much they’re making but then make sure that you’re actually clawing back more of that money earlier on, based on how much they’re making when you’re actually assessing taxes. The same way you do now as far as withholding from paychecks.

Owen: Right, and just to offer a crude version of that, you could impose a flat tax and the revenue from that would just be turned into a dividend that would go equally to everyone. So everyone is paying the same percentage of their income into the basic income fund, but the way it works out is that at a certain point, you are paying and receiving about the same amount, and everyone above that ends up paying more, but they still get the dividend.

Jim: To give some more specific, since I want to actually make sure that we do give an answer to this question, there are actually a lot of different ideas for how we fund this out there. Depending on who you ask, you’re going to get different answers. Some of the most common ones that I hear proposed, one is the idea of — I think, particularly as the starting point — looking at the Carbon Dividend.

We’ve talked about that in the past. There was a proposal in California. There is currently, in fact, a campaign in Washington, DC around taxing carbon and paying out to revenue that comes in as a universal income, as universal dividends to people in the region. That could at the very least provide us with a powerful first step towards basic income by saying, “alright we’re setting up the system that gives everyone equally regular payments of money.”

Owen: I think that Carbon Dividend idea is my favorite in this whole space because it does start to address climate change as well. It takes this idea that we have shared resources, in this case, the air and the environment and that we are all invested in this whether we want to be or not. By taxing the use of the environment essentially which is a shared resource then we can all benefit from it.

Along the same lines, though very different, is the Financial Transactions Tax. That’s another one that gets thrown in periodically. We all benefit from the infrastructure of our financial system, and some businesses and people use that quite a lot to conduct business, trade stocks, whatever. By having just a very small fee on financial transactions, you could also do the same thing and fund the basic income.

Jim: Another one that often gets discussed is the idea that a Land Value Tax, where you’re assessing the value of any given piece of property that either a person or a corporation might own, and then saying, “we’re going to set some low level of taxation so that every month or every year, you are paying a certain amount based on the value of that piece of land.” Not just the land itself, but what’s actually on the land.

One thing that I think is really interesting about the Land Value Tax is it actually starts to get closer to the idea of a wealth tax. Something that is taxing not just how much money people are bringing in, but how much they actually own. Land isn’t a perfect measure of someone’s wealth, but it tends to be pretty close a lot of the time. That could help not only with providing the support that you get from basic income but also to share prosperity and share wealth across the country by really looking at that as the source of the funding.

Owen: Right. I think this is an important concept because while income is easy to track, or easy enough, a lot of the disparity that we see in the world is through wealth, and an actual wealth tax is very hard to administer because unless you have some way to track all forms of wealth, people are going to be able to move it around to not be taxed. But land is always there. You can’t pick it up and move it somewhere else. It does tend to be a good proxy for a holding place for wealth, especially in California, where we are.

Lastly, we can touch on general progressive taxation. We mentioned the income tax before but it doesn’t have to be a flat tax. It could be a progressive tax that increases as you go into higher income levels. There’s also a capital gains tax and perhaps others that you could mention.

Jim: Yes. Touching on the capital gains, right now we have the level of that set considerably lower than income. What that’s effectively doing is saying, sitting on wealth, you and the amount of money you get from that, you’re actually paying less in taxes and someone who’s working for the money.

Owen: You see those incentives pretty clearly in the market.

Jim: Right, exactly. That’s actually encouraging people to hoard rather than to spend. Also, again, if you look at the various campaigns that are going on around different policies, you’ll hear people talking about closing tax loopholes as well, particularly for corporations. There’s a lot of ways that companies are able to avoid what is the supposed tax rate that they might owe, due to how complex the tax code is in many places.

Owen: Hopefully, that gives you a sense of how we might fund the basic income. There are a lot of paths to do it, a lot of different sources you might look to. It should be said there’s no one answer to this. I’ve said this before the first step in creating a basic income is deciding that we want one. Once you have that destination, there are a bunch of paths to get there.

Jim: Right. I think it’s important to remember that oftentimes when we talk about these big bold policies, we know they’re going to cost a lot, but in most cases, we don’t necessarily have to go through all the math right upfront. It’s important to just know that yes, the funds exist out there. Let’s think about what this is going to do for people and then if this is actually something that’s going to help folks, let’s fight to make it happen.

Owen: Okay. Next question comes from Darcy Lengthier — hoping I’m pronouncing your name right, Darcy. “Which country will be next?” I have a couple guesses, and they’re pretty unoriginal.

[laughter]

Jim: Yes, we’ll probably have similar answers here. I would say any country that’s currently doing a pilot for basic income is probably pretty high on the list for ones that have potential to enact one. We talked about this before, but Finland launched their pilots in the last year. Ontario in Canada just launched their pilot. We do have the pilot happening in Oakland through Y Combinator, but it’s a little bit of a different situation since it’s a private entity funding it. I wouldn’t read quite as much into that as these programs that are actually being initiated by national governments and what that signifies as far as intentions.

Owen: I think my first pick in the draft would be Canada because they’re doing a pilot, and it feels like this federal government that seems like it would be ready to try something like this at least in terms of a Carbon Dividend or even like an Alaska style, natural wealth kind of thing.

Jim: That said, I think that there certainly are other countries out there talking seriously about it. Particularly for some of the smaller countries, if the people in power decided alright, this is a priority for us, if it was a country that was in a situation that have a reasonable amount of wealth or a lower cost of living for their population, they could potentially move pretty quickly to enact something.

Owen: I wouldn’t put Switzerland at the top of the list right now, but they have already had the referendum. It’s a small country with a lot of wealth. The math is a little easier there.

Jim: I think the big answer is, we don’t know. I think as far as what country will do pilots next, we haven’t talked about it much, but Barcelona is in the process of getting a pilot going. I do know there’s a lot of others that are in these discussion phases if not quite ready to launch.

Owen: The one last thing I’ll throw in there is, if you were to say the five most likely countries or the field, I’m probably going to take the field. I could see this coming out of somewhere unexpected or somewhere we’re not figured out right now.

Jim: Absolutely. Our third question is, “what kind of timeline are we looking at for America as a whole to implement basic income?” That came from Tim Kelly on Twitter.

Owen: Maybe December, January?

[laughter]

Jim: They’re just about there.

Owen: More seriously, I think one step might be to have this become more mainstream within the Left / Democratic Party in the US. If and when the Democrats take back power, maybe we could see something like a Carbon Dividend. I could see that happening in the 2020s, to give a decade.

Jim: If we can have it in 2020, I would be very happy. That is probably a little sooner than I was–

Owen: It’s a bit aggressive.

Jim: I would say, I generally tell people that if those of us who support the policy approach this right, 15 years seems like a reasonable timeline. That said, I think this is a kind of policy where it’s going to be very, very far off until it’s not. I think that there’s going to be nothing linear about the progression of the basic income movement. It’s going to be those of us who are in the space talking about it, getting more people hearing about it. Really writing the playbook for how this might happen, and then it’s going to be a question of when is that moment.

When is that moment when suddenly people are like, “Oh, we need something really different. We actually need to guarantee fundamental economic security for people. How do we do that?” If at that point, we have really set the stage for basic income, it could happen really, really fast.

Owen: I agree. I used to think of self-driving cars and trucks as the moment when everything was going to flip. I have actually backed off that a little bit just because they’re already on the road. This is already happening, and it hasn’t really catalyzed a discussion in a way that means policy is going to happen very soon, but I think we might see something at some point where one day Amazon lays off thousands or tens of thousands of workers. It’s them, plus Google, plus others, and it creates some amount of desperation where people are looking for a policy fix.

Jim: I will say, I don’t think we haven’t seen any significant amount of layoffs around self-driving vehicles.

Owen: Right. That could still happen.

Jim: It’s something that I know at this point, a lot of people think could be coming relatively soon, but how that will actually proceed? I think we’ll have to see. I will say I think I’ve been struck by how much people’s perception about the fundamental characteristics of work have changed in the last couple of years. That two years back, I felt like most people believed that the way that we do work would stay — I think stay is actually the wrong word because it was already shifting at that point, but could remain similar to how we did that in the 20th century.

Now, I think more and more people recognized that that model for how our labor space operates just is — there isn’t a way to go back. We are in uncharted territories here. We do need to be thinking more outside the box as far as what are the right policies to provide people with security they need.

Owen: I think just to add a little bit onto that. The moments that might catalyze something might just be something where we realize that we are in uncharted territory, the collectively “we.” Because I think we’re already there. We are already into the woods, and we’ve lost our map. But you don’t necessarily know that until some day, you woke up, and you realize you’ve lost the path. Sort of a strange metaphor for us [laughs].

I think it’ll be as much a realization of where we already are than something where we get to a point and, yeah, we are there.

Jim: We’ve meandered a bit from the original question here. So if we had to name a timeline, I would say I’m going to stick with 15 years.

Owen: Okay, I’m going to go Price Is Right style and just take the under on that one.

Jim: [laughs] 14 years?

Owen: Aggressively optimistic there. On the Price Is Right, you say one year and then you get all the years below that, the below years. This is a very dated reference, I’m realizing. I don’t know think that show is even on the air anymore. Haven’t watched TV in a while. Okay, related question, also the final question, “how do we get there?” So, Jim, how do we get there?

Jim: Well, this is asked by StepUpBG on Twitter, and we covered a little bit of this in the last question. I truly believe that the right approach to move towards basic income is to say that right now, we are laying groundwork. We are doing the things that make basic income more familiar, more understood and so that once we get that moment, we can say, “Alright, we got this. We know what this is. We’re ready to go. Let’s make this happen.”

Owen: I think you find, at least in America, that often the first time people hear of this policy — maybe less so, I’m getting this reaction less and less — but the most common first reaction is some amount of shock towards the idea of just giving people money unconditionally. I think people do need to sit with the idea for a little bit, and it needs to penetrate into more circles and become something that people are less afraid of talking about.

Jim: Right, I think part of that is just talking to more people about basic income and what it might do, having it be a more familiar concept that people they know and trust actually think this could be a really good solution and I think part of that is looking at what are the stepping stone policies that, in practice, can actually show people more what this is about. I think what to makes sense to go back to here is looking at the Alaska model and how the fact that everyone there is getting an unconditional payment every year is actually something that makes this whole thing make more sense to people a lot of the time.

Owen: Yes, and along that, I’m very excited about the trials in Ontario that just started and the upcoming one’s run by Y Combinator because those will be real trials, real stories, real people who are benefiting, so then it’ll be that much less abstract and that much closer.

Jim: I think those stories are going to be important and then what I would really like to see is for some city or state in the US to enact some small universal dividend in the same style as the Alaska model because I think that it’s that combination of hearing the stories of people who are getting full basic income and then yourself receiving this smaller additional income. Suddenly the intellectual leap between everyone getting basic income is much, much less than it is today.

Owen: I’m of the mind that $100 a month, even though we usually talk in terms of around 1,000, something like a 100 could be transformative for a lot of people and, if not transformative, would make a big difference. You would feel it.

Jim: If you’re scraping by, 100 a month is a game changer.

Owen: Yes, and speaking from my own experience, I wouldn’t say I’m scraping by, but I’d love $100 a month. [laughs] That wouldn’t be nothing.

So, how do we get there? I think a lot of what we’re already doing, and hopefully more trials, more support, more talking about it, more and more podcast episodes.

Jim: I think this is one where all y’all listeners can actually play a big role here. Again, make sure you are talking to people about this, looking for ways that you can push the idea forward. That’s actually what’s going to help make this happen.

Owen: So thank you to everyone who sent in questions. Please keep those coming, you can send them to myself @owenpoindexter at Twitter or Jim, you’re @dr_pugh there.

Jim: Or just tweet out the Universal Income Project, @UIProj on Twitter. We’ll get them there too.

Owen: Or you can find the Universal Income Project on Facebook as well.

Thank you so much for listening to the Basic Income Podcast. Thank you to our producer, Erick Davidson. Again, please tell your friends, talk about basic income, talk about the podcast. This could be a good conversation starter for them. Subscribe if you have not already on Apple Podcast or the service of your choice. And while you’re there, please do leave us a rating or review. It’ll help more people find the podcast. See you next week.

The Basic Income Podcast

Interviews with the biggest names in the Basic Income movement, hosted by Jim Pugh and Owen Poindexter.

Archives

Exploring the Potential of Basic Income in India, feat. Saksham Khosla

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Expanding the Earned Income Tax Credit, feat. the California Budget & Policy Center

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The Basic Income Debate in Australia, feat. Emma Dawson

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A Basic Income Presidency, feat. Presidential Candidate Andrew Yang

Is Basic Income a Bipartisan Policy?

Analyzing Basic Income Models in Washington DC

Fair Shot: Rethinking Inequality and How We Earn, featuring Chris Hughes

Economic Analyses of Basic Income, featuring Rakeen Mabud

How UBI Was Added to the California Democratic Party Platform, featuring Rocky Fernandez

Why Basic Income Advocates Should Defend SNAP, featuring Jess Bartholow

An inside look at the UK Opportunity Fund, featuring Anthony Painter

Basic Income Speculative Fiction, featuring Sandra Haynes

What Basic Income Will and Won’t Solve

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Y Combinator’s Basic Income Study, featuring Elizabeth Rhodes

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Basic Income Q&A: Inflation, Predatory Lending, and the Meaning of Work

Basic Income and the Disabled Community, feat. Annie Harper

Human Profiles of Economic Insecurity, featuring Rachel Schneider

Basic Income at the City Level, Featuring Mark MacKinnon

Basic Income Q&A: How to Pay for It, Which Country Will Go First, and More

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