About Basic Income
Find out how a basic income can provide economic security for every American.
- How does it work?
- What are the benefits?
- How do we pay for it? Where does the money come from?
- What is origin of this idea, the history of basic income?
- But won’t it undermine work incentives? Won’t people quit their jobs?
- But isn’t it wrong to give money to people who waste or squander it? What about drug addicts, alcoholics, and folks who are lazy or irresponsible?
- What about children? Shouldn’t parents get a larger amount, a supplement?
- Won’t it cause inflation? What if prices go up for food and housing?
- How will this affect economic growth? What if there’s a recession? What about unemployment?
- How does basic income relate to Social Security?
- Could a state enact a basic income? What about a city or county?
- Are there countries that already have basic income or something similar?
- What are the politics of basic income? Who’s likely to support it? Liberal Democrats? Conservative Republicans? Independent candidates? “Third” parties?
What is a basic income, exactly? How does it work?
It’s simple, and that’s what makes it so powerful.
Set an amount – maybe $1,000 a month, or $800 or $1,500 a month – and have government provide that to every adult American. Everyone gets the same amount, ideally enough to guarantee that people can afford food, clothes, shelter, and other necessities.
We can adjust the amount occasionally when economic conditions require it. State and local governments can supplement it, using local revenues.
This is an income independent of what people earn at a job or through investments, and everyone gets it, no questions asked, either as a direct payment or combined into the tax system. It’s economic security for every American.
Why do we need a basic income? What are the benefits?
Imagine what this will do for you and your family. Suppose you have, say, $1,000 a month, independent of your job or other income.
Do you have a student loan or credit card debt? You’ll have money you can use to pay it off. Maybe buy a car or home, take a vacation, invest for your retirement.
Are you unemployed or unhappy with your job? You’ll have freedom and opportunities, to go back to school, if you like, or start your own business.
Do you have kids? You might choose to be a full-time parent. Or work part-time so you can attend their afterschool activities, meet with their teachers, and spend more time hanging out with them. You might put basic income money into their college funds.
Also think about what this will mean for your community and our country.
A basic income of $1,000 a month is $24,000 a year for a couple. That’s more than the current official poverty level for a family of four. We can end hunger, end homelessness, end extreme poverty. Current policies cannot possibly achieve that; no way, no how, no hope.
Because it’s universal and unconditional, basic income creates a baseline of justice and equality. Everyone will be on the political and economic playing fields, with money to participate actively as citizens and in markets.
Are there specific issues or problems you care about? Racism? Poverty? Income inequality? Health care? Education reform? Global warming and climate change? Political corruption and the power of special interests? Every American will have the means and incentives to work together as citizens, to make our government more efficient, responsive, and accountable.
How do we pay for it? Where does the money come from?
America can positively afford a basic income. When We the People demand it, our elected representatives will readily find ways to fund it. After all, our government found the funds – trillions of dollars – to pay for the wars in Iraq and Afghanistan, and to bail out Wall Street and General Motors.
Everyone will have money for basic needs, food, clothes, and shelter. We’ll be able to cut or eliminate countless federal, state, and local government programs:
- Cut welfare, food stamps, housing assistance, and such;
- Eliminate corporate welfare and crony capitalism, the hundreds of billions of dollars government gives big corporations; and
- Reform the tax code, making it fairer and simpler by abolishing tax breaks, loopholes, and deductions, most of which go to the rich and superrich.
Today, cuts and reforms are unattainable, even though a huge majority of Americans favor them, because special interests control our political system and profit from every program. Basic income gives every American a personal stake in defeating the special interests and enacting the reforms we want.
Some of the funds can also come from a carbon tax on oil, coal, and natural gas. Basic income is like a dividend from the tax, giving everyone money we can use as we adapt and reduce consumption. Leading economists and environmentalists favor this approach, “carbon tax and dividend,” and say it’s the most effective way to slow the rate of global warming.
Other options include a financial transactions tax on Wall Street speculation, reducing the defense budget, land rent fees, increasing the money supply, streamlining government operations, and the list goes on.
There’s plenty of money available to pay for a basic income.
What is origin of this idea, the history of basic income?
It started with the Founders, and many folks since then. Here’s a brief history of related ideas and efforts:1
Thomas Jefferson, while serving in the Virginia state legislature, before he wrote the Declaration of Independence, proposed giving 50 acres of land to propertyless individuals to secure their subsistence and their rights as citizens.
John Adams asserted that “every member of society” should be “possessed of small estates” as a basis for “equal liberty.”
Thomas Paine, in Agrarian Justice (1797), viewed land as the “common heritage of mankind,” and sought to have landowners pay a “ground rent” into a “national fund.” Every citizen would then receive a cash payment at age 21 and yearly payments starting at age 50 as “a right, and not a charity.”
Abraham Lincoln called for, and Congress passed, the National Homestead Act of 1862. It granted 160 acres of public land to any head of a family 21 years of age or older who agreed to reside upon the land and cultivate it for five years. Almost 720,000 homesteads were established under the law, and homesteads continued to be available in some states until the early 1900s.
Two books about income inequality and insecurity helped spark the Populist and Progressive movements, and each book sold more than two million copies. In Progress and Poverty (1879), Henry George argued that poverty is a consequence of allowing a few people to control the land. He called for a tax on land values, as the single tax, and asserted that it would create economic opportunities and provide enough revenue to end poverty. Edward Bellamy’s novel, Looking Backward, 2000-1887 (1888) imagined a future where government provides for everyone’s basic needs. People around the country formed more than 160 “Bellamy Clubs” to promote his ideas.
Social Security was enacted in response to political pressure from two mass movements for guaranteed income. In 1934-5, more than two million people supported the Townsend Plan to give everyone age 60 and over a monthly payment of $200 (about $3,500 in today’s dollars). Share Our Wealth claimed to have 7.5 million members, and they were demanding a guaranteed annual income for every family, $2,500 ($44,000 today).
Franklin Roosevelt, in his annual Message to Congress on January 11, 1944, and in a fireside chat to the American people the same evening, stated that:
We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. … People who are hungry and out of a job are the stuff of which dictatorships are made. … In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all — regardless of station, race, or creed.
Economist F. A. Hayek was a leading critic of socialism and big government. Yet in a 1944 book, The Road to Serfdom, he endorsed the concept of providing “the security of a minimum income.”
There can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. … [This is] no privilege but a legitimate object of desire … [that] can be provided for all outside of and supplementary to the market system.
He was awarded the Nobel Memorial Prize in Economics in 1974.
In 1947, Eleanor Roosevelt was asked to chair a United Nations commission on human rights and freedoms. Their efforts led to the Universal Declaration of Human Rights, which is widely respected and cited around the world. Several articles imply a right to a basic income.
Article 3: Everyone has the right to life, liberty and security of person.
Article 25: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
Peter Drucker, a pioneer in the study of business and management, proposed a “predictable income plan” in The New Society, published in 1949 and reissued in 1962 and 1993. Predictable income would “banish the uncertainty, the dread of the unknown and the deep feelings of insecurity under which the worker today lives.”
He also rejected the idea of trying to guarantee jobs or wages. Any job or wage guarantee “would not be worth the paper on which it is written. It would give the worker the illusion of security which is bound to be cruelly disappointed” during economic downturns.
Conservative economist Milton Friedman advocated a “negative income tax,” cash payments to the poor. In Capitalism and Freedom (1962), he wrote:
The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash. It is general and could be substituted for the host of special measures now in effect. It makes explicit the cost borne by society. It operates outside the market.
Friedman served on Richard Nixon’s committee of economic advisors, and was awarded the Nobel in economics in 1976. With his wife Rose, in 1980 he published Free to Choose, which was also a PBS television series:
We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions. … A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.
In Free Men and Free Markets (1963), social philosopher Robert Theobald sought to establish “new principles specifically designed to break the link between jobs and income.”
The need is clear: the principle of an economic floor under each individual must be established. … Basic Economic Security can be best regarded as an extension of the present Social Security system to a world in which conventional job availability will steadily decline.
John Kenneth Galbraith was a leading liberal economist. He called for a guaranteed income in a number of articles in the 1960s and in the second edition of his bestselling book, The Affluent Society. In a 1966 article he wrote:
We need to consider the one prompt and effective solution for poverty, which is to provide everyone with a minimum income. The arguments against this proposal are numerous, but most of them are excuses for not thinking about a solution, even one that is so exceedingly plausible.
He returned to this theme in a 1999 article about the persistence of a large number of poor people even in wealthy countries:
The answer or part of the answer is rather clear: everybody should be guaranteed a decent basic income. A rich country such as the U.S. can well afford to keep everybody out of poverty. Some, it will be said, will seize upon the income and won’t work. So it is now with more limited welfare, as it is called. Let us accept some resort to leisure by the poor as well as by the rich.
Martin Luther King Jr. called for a guaranteed income in his last book, Where Do We Go From Here: Chaos or Community? (1968). This is much more than a civil rights program, he noted, because more than two-thirds of the beneficiaries would be white.
The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income. … We are likely to find that the problems of housing and education, instead of preceding the elimination of poverty, will themselves be affected if poverty is first abolished.
There is nothing except shortsightedness to prevent us from guaranteeing an annual minimum – and livable – income for every American family. The time has come for us to civilize ourselves by the total, direct and immediate abolition of poverty.
In the spring of 1968, Paul Samuelson, the 1970 Nobel laureate in economics, joined four other prominent economists – John Kenneth Galbraith, Robert Lampman, Harold Watts, and James Tobin, a 1981 Nobel laureate – and published a letter that called on Congress “to adopt this year a national system of income guarantees and supplements.” The letter was widely circulated, and more than 1,200 of their colleagues signed on.
Philip Wogaman, a minister and professor of Christian social ethics, wrote Guaranteed Annual Income: the moral issues in 1968. He concluded that “the case for guaranteed income is persuasive on both ethical and practical grounds.”
Guaranteed income as a secure economic floor will make it possible for men to become what God intended them to become … The fact that many will doubtless abuse this freedom is a risk which God has taken in creating man in the first place.
He also suggested that “Christians may have some unique contribution to make with respect to the guaranteed income issue” and, with their passion for justice, Christians “may have a duty to endorse guaranteed income.”
Lyndon Johnson established a national commission on poverty that held hearings around the country. Members included presidents of major corporations, presidents of labor unions, and politicians from both major parties. They held hearings around the country, and their report was unanimous:
Our main recommendation is for the creation of a universal income supplement program financed and administered by the Federal Government, making cash payments to all members of the population with income needs. The payments would provide a base income for any needy family or individual.
Work requirements … cannot be used effectively in determining eligibility for aid, and are undesirable in any case. … Inevitably, any simple test designed to withhold aid from the voluntarily unemployed will deal harshly with some of those who cannot find work.
Our observations have convinced us that the poor are not unlike the non-poor. Most of the poor want to work. They want to improve their potential and to be trained for better jobs. Like most Americans, the poor would like to do something with their lives beyond merely subsisting. By providing them with a basic system of income support, we provide them with an opportunity to do these things.
We do not believe that work disincentive effects of the proposed program would be serious.
The federal government conducted a series of income maintenance experiments in New Jersey, Denver, Seattle, and a few other locations. About 8,500 families received guaranteed cash payments between 1968 and 1975. The results showed a slight decline in total work hours, though that was mostly wives staying home to care for children and teens staying in school or going back to school.
Richard Nixon’s Family Assistance Plan passed the House of Representatives twice in 1970, with votes of nearly two-to-one. In the Senate, however, the Finance Committee blocked it from going forward; the full Senate never voted on it. The plan’s author was Daniel Patrick Moynihan, and he discussed it in The Politics of a Guaranteed Income (1973).
“A national guaranteed income” was in the founding platform of the D.C. Statehood Party, which formed in 1970 to advocate for the civil rights of residents of the District of Columbia. Residents of D.C., now 660,000 people, have only a non-voting delegate in the House of Representatives and no voice in the Senate. The U.S. Congress often overrides actions by the elected mayor and city council.
In the 1972 presidential race, Democratic candidate George McGovern campaigned for universal “Demogrants” — guaranteed payments of $1,000 a year to every citizen. The plan was designed by James Tobin, a 1981 Nobel laureate.
Gerald Ford, while still in Congress, was the leading Republican supporter of Nixon’s Family Assistance Plan. In 1975, Ford signed a scaled-back version, the Earned Income Tax Credit. The EITC has been America’s most successful antipoverty program, and Democrats and Republicans have expanded it repeatedly.
Comprehensive welfare reform was a major issue for Jimmy Carter in his 1976 presidential campaign, but Congress rejected his Program for Better Jobs and Income Support.
Alaska has a small basic income, since 1982: the Permanent Fund Dividend. Every resident gets a yearly check, money from oil royalties, between $1,000 and $2,000 normally, depending on oil prices and other factors. Alaskans love it. The benefits have been well documented. Basic income activists around the world cite it as an example.
The term basic income was introduced in the mid-1980s, and the Basic Income Earth Network, BIEN, was founded in 1986. (Initially, the “E” in BIEN was “European.” Members changed it to “Earth” after a 2002 congress in Geneva.)2
Jeremy Rifkin, a professor at the Wharton School, is leading analyst of economic trends and technology. In The End of Work: the decline of the global labor force and the dawn of the post-market era, 1995, he wrote:
Since the advances in technology are going to mean fewer and fewer jobs in the market economy, the only effective way to ensure those permanently displaced by machinery share the benefits of increased productivity is to provide some kind of government-guaranteed income. … With guaranteed income independent of their jobs, workers would be more free to set their own schedules and adapt to changing conditions. That adaptability would in turn allow greater flexibility for employers, plus many benefits for society as a whole.
The U.S. Basic Income Guarantee Network, was founded in 1999 as an informal association of academics and activists. Since 2002, USBIG has held annual meetings, recently in partnership with Basic Income Canada.
Stanley Aronowitz, a professor at City University of New York Graduate Center, long-time labor organizer, and author of many books, endorsed a guaranteed basic income in Left Turn: Forging a new political future (2006).
Charles Murray, a resident scholar at the American Enterprise Institute and author of several influential books, published In Our Hands: a plan to replace the welfare state in 2006. He called for guaranteed income of $10,000 a year to every citizen age 21 or over.
The creator of How Stuff Works, Marshall Brain is the author of several books and teaches entrepreneurship at the University of North Carolina. He proposes a guaranteed income of $25,000 for every U.S. citizen, and presents this as a way to simultaneously (1) “create the largest possible pool of consumers,” (2) promote “maximum economic stability,” (3) “create the largest possible pool of innovators,” (4) encourage investment, and (5) provide people with “maximum freedom.”
Karl Widerquist is an economist and a professor of philosophy at Georgetown University–Qatar, and was a co-founder of USBIG. He has written or edited several books about basic income, including Alaska’s Permanent Fund Dividend: examining its suitability as a model (2012); and Exporting the Alaska Model: adapting the Permanent Fund Dividend for reform around the world (2012).
Journalist and businessman Peter Barnes, in With Liberty and Dividends for All: how to save our middle class when jobs don’t pay enough, (2014), calls for a basic income funded through carbon taxes and other sources of natural wealth. This combined policy, in his view, is necessary for real progress on global warming and income inequality.
Basic income is an idea whose time is now. Basic Income Action, founded in 2015, is writing the next chapter.
1. This partial history was abridged and adapted by Steven Shafarman from his book, The Basic Income Imperative: for peace, justice, liberty, and personal dignity.
The extended version adds Nobel laureate economists James Meade, George Stigler, and Robert Solow. Also prominent scholars and social scientists Bertrand Russell, Margaret Mead, Marshall McLuhan, Erich Fromm, Buckminster Fuller, Philippe Van Parijs, Guy Standing, Hazel Henderson, and Bruce Ackerman. Also many less-known scholars and activists.
2. The Basic Income Earth Network defines a true basic income as universal, unconditional, and paid to individuals. “A basic income is an income unconditionally granted to all on an individual basis, without means test or work requirement.”
Some people use the term basic income when the money goes to households, not individuals, or it’s means-tested and only includes the poor.
But won’t it undermine work incentives? Won’t people quit their jobs?
Basic income is just that, basic. It’s a floor. We’ll still have plenty of reasons and incentives to work and earn: to buy a home, save for retirement, do more for our kids, save for a vacation, pursue a romance, impress neighbors or classmate or relatives. Or no specific reason.
Most Americans are ambitious, entrepreneurial, and willing to work hard; we enjoy the challenges and rewards, and we want to get rich. When our basic financial security is guaranteed, everyone will be free to pursue meaningful work.
Yes, some people will quit jobs, and that’s likely to be good for them and their families; good for America, too. People will:
- Go back to school, to gain new skills and credentials;
- Start businesses, creating jobs for themselves and other folks;
- Pursue careers as artists, actors, athletes, writers, and musicians;
- Invest more time and attention on kids and families, perhaps as full-time parents.
Employers will benefit as well, because unhappy workers are usually unmotivated. When someone quits a job, employers can hire more productive workers.
But isn’t it wrong to give money to people who waste or squander it? What about drug addicts, alcoholics, and folks who are lazy or irresponsible?
There are such people today, have been throughout history, and will be tomorrow, too, no matter what we do.
Like today, many such people will reform on their own or with help from family, friends, faith, or therapy. Unlike today, everyone will have direct financial support and incentives for personal responsibility. Folks who want to reform will be more likely to succeed.
Everyone will be better off. Addicts and alcoholics will be less of a burden on their families and friends, less of a burden on society, and less costly to our government. Their friends and families will have added ways to help them, and the freedom to just love them and let them be.
What about children? Shouldn’t parents get a larger amount, a supplement?
Some proponents favor an extra amount for each child, maybe $200 to $600 a month. An alternative, or in addition, is to help parents through the tax code. Or invest more money in education, or increase funding for children’s healthcare, or provide other services. These are issues to discuss as we move forward.
Basic Income Action supports all variations of basic income, including proposals to supplement the amount for children. Also plans for partial or means-tested programs as steps toward a true basic income.
Won’t it cause inflation? What if prices go up for food and housing?
Concern about inflation is a reason to be diligent about cutting welfare, eliminating corporate welfare, abolishing tax breaks and credits, and ending wasteful spending at all levels, federal, state, and local. Those cuts will offset the basic income.
Many economists are now more concerned about deflation than inflation. Because of stagnant incomes and technology-driven job reductions, Americans have less money to spend, and that lack of spending and demand is hindering economic activity generally.
If there is any inflation, ever, basic income will be a cushion, protecting us from higher prices. We’ll stay calm while the Federal Reserve acts to prevent further inflation. Economic conditions will be more stable than today, and stability is good for consumers, businesses, entrepreneurs, and investors.
How will this affect economic growth? What if there’s a recession? What about unemployment?
Basic income will boost economic growth, perhaps significantly, because everyone will have extra money to spend. Our demands will drive businesses to provide goods and services, and to create jobs — demand-driven growth, in contrast with current supply-side policies.
We’ll be able to prevent recessions, or end them rapidly and reliably, by increasing the basic income amount. Standard economic theory asserts that the correct policy response is to increase the money supply. Today, there are only two possibilities. The federal government can cut taxes and increase sending, fiscal policy; and the Federal Reserve can cut interest rates and prod banks to lend more actively, monetary policy. With both, the outcomes are indirect, delayed, and unreliable. Basic income is a third option, and the effects will be direct, immediate, and certain.
Unemployment will fall. When people use basic income to go back to school, start businesses, or be full-time parents, they won’t be counted as unemployed because the official rate only counts people who are actively looking for jobs. And those jobs will be available for other folks. Most important: everyone who’s unemployed will have a secure income, money for food, clothes, and shelter, the means to live with dignity and participate in society.
Economic conditions will be more stable, prices more predictable, business and consumer confidence higher.
How does basic income relate to Social Security?
These are distinct programs. Seniors will get both, basic income and Social Security.
Basic income is like “Social Security for all,” though it’s more social and more secure. More social, because it includes every adult citizen as equals. More secure, because it’s unconditional. Everyone will be able to count on it regardless of past earnings and present circumstances.
Social Security reform is inevitable, because the current rate structure is unsustainable. This is a good reason to enact basic income promptly.
Could a state enact a basic income? What about a city or county?
Yes, definitely, at least a small one.
Alaska’s Permanent Fund Dividend has been operating since 1982. Every resident gets an equal cash payment every year, dividends from oil royalties. It’s normally between $1,000 and $2,000, depending on oil prices, so it’s too small to be a full basic income, yet the social, cultural, and economic benefits are well documented. Alaskans love it.
Although there are no current examples of local programs, our government funded a series of local experiments in the late ’60s and early ’70s. More than 8,500 families in New Jersey, Denver, Seattle, and other locations had guaranteed payments to keep them at or above the poverty level. The final analyses showed a slight decline in total work hours, but that was mostly wives staying home with their kids and teens staying in school or going back to school.
A similar experiment in Canada had even more positive results. Between 1974 and 1979, poor residents of Dauphin, a town of 10,000 people in Manitoba, received regular unconditional payments to cover basic living costs. There were notable gains in health, education, employment, and social conditions.
Basic Income Action is forming chapters around the country, and will be supporting local efforts.
Are there countries that already have basic income or something similar?
Not yet, although various cities are launching programs. And there are campaigns underway in many countries, with elected officials as champions. That’s happening throughout Europe, especially Finland, Switzerland, Italy, and England. India, Japan, South Africa, and Canada also have active campaigns.
Brazil actually has a law declaring that everyone has a right to a minimum income. The government is introducing it gradually through the Bolsa Familia, conditional cash transfers for the poor. In 2015, more than 60 million Brazilians are receiving monthly payments, 30 percent of the population of 200 million.
Mexico and Columbia also offer conditional cash transfers. Those programs, and Brazil’s, have been carefully studied. Evidence strongly confirms the efficacy of giving money directly to the poor. Moreover, because any conditionality imposes added costs, bureaucracy, and other complications, the evidence clearly demonstrates the value of an unconditional basic income.
The international movement is accelerating, with public debates, pilot programs, and other progress in many places. A good source for updates is the Basic Income Earth Network.
What are the politics of basic income? Who’s likely to support it? Liberal Democrats? Conservative Republicans? Independent candidates? “Third” parties?
This idea has the potential to attract people from across the political spectrum, plus Americans who normally don’t vote.
Liberal Democrats can present basic income as the key to progress on racism, income inequality, global warming, and other issues or problems. Campaigns might cite Martin Luther King Jr., “[A] host of positive psychological changes inevitably will result from widespread economic security. The dignity of the individual will flourish.” And “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”
Conservative Republicans can focus on shrinking the size and power of the federal government. Basic income is a way to promote free markets and free enterprise, and possibly to have a flat income tax that’s also fair. When touting these ideals, conservatives often refer to economist Milton Friedman, and he supported a basic income. “We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax.”
Independent candidates will have a ready-made platform, a specific practical positive alternative to the status quo. Envision a three-way contest between an Independent calling for basic income, vs. a Democrat and a Republican with their usual platforms and rhetoric. Independents can gain credibility and traction by citing the fact that moderate Democrats and moderate Republicans supported guaranteed income in the 1960s.
Greens, Libertarians, and other “third” parties can adapt basic income as a vehicle for their values and goals. The Green Party might propose to fund the basic income through high carbon taxes, and their platform already includes a basic income plank, since 2004. Libertarians might call for a large basic income as way to win popular support for eliminating government programs and maximizing personal liberty.
Cities and states can enact basic incomes without waiting for the federal government, so campaigns can happen at all levels: local offices, state legislatures, governors, Congress, and president.
Basic Income Action is nonpartisan or transpartisan. Our mission is to educate and organize people to take action, and we are preparing educational materials that any political campaign or candidate can use.
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