When I first became interested in economic policy, I found Milton Friedman’s advocacy of a “negative income tax” appealing. As I recall (and I read about it a long time ago), the idea was that people making more than a set amount–presumably, an amount sufficient to live on–would pay taxes, and those making less would receive a supplement bringing them up to sufficiency.
One virtue of such an approach would be to cut out the costs of the significant bureaucracy devoted to administering complicated systems of public assistance.
As I say, I read this a long time ago, and my recollection of the details is hazy at best. What brought it to mind was reading about a proposal currently under review in New Zealand.
New Zealand’s Labour Party is considering the concept of a basic “citizen’s wage.” Andrew Little, leader of the Labour Party, confirmed this as the result of the potential for higher unemployment in in the coming months and years. “Citizen’s income” is also known as Universal Basic Income (UBI). The idea is that everyone gets a basic amount of money to live off of, like a wage, and benefit systems are gotten rid of.
Switzerland and Finland have introduced similar systems.
I haven’t seen studies comparing the costs of such systems to the patchwork, cumbersome and demeaning welfare programs we currently administer, but I suspect a citizen’s wage would save considerable tax dollars.
Of course, I’m sure the very idea would raise howls of protest from the self-righteous legislators who want to punish people for being poor, and who seem to enjoy telling welfare recipients what they can buy at the grocery…
I take issue with “telling welfare recipients what they can buy at the grocery…” I don’t see why recipients shouldn’t be advised of what food stamps can purchase. I think buying whole chickens instead of the way more expensive skinless boneless breasts, extends a person’s buying amount. a sack of potatoes vs. a bag of potato chips brings more bang for the buck and is of course more healthy. Fresh and frozen vegetables instead of convenience foods. It pains me to look some of the unhealthy choices people make—A whole chicken can go so much further than spending the same $’s on the afore mentioned and as an added bonus the parts that don’t get eaten (like the back neck and wings) can be frozen and collected to make homemade chicken broth. As a society, we have gotten away from the basics in the kitchen.
It was called the Family Assistance Plan and supported by Nixon. It got heat from right and left. The amount of the crossover was $4,000. Recipients continued to get help but it declined to avoid disincentive to work. The floor was a 4,000 subsidy, with no strings. Some on left were concerned that without regulation, and the loss of other programs, children would go without as irresponsible parents misspent. The right were concerned that the poor would make luxury purchases.
The Earned Income Tax Credit (EITC) was our implementation of the negative income tax. I was recently back in Indiana and was surprised to learn that so many otherwise intelligent people are unaware that the basic welfare program (TANF) is a temporary (2-5) year program. It would be difficult to have an informed discussion of welfare when even the most basic facts are so elusive to so many. It seems to be easier to resent “those” people than to seek out the facts.
A living wage is a good place to start, and states and cities across the country are starting to enact it. Why should taxpayers subsidize the earnings of profitable corporations by allowing them to pay wages that keep people in poverty? A sufficient living wage would go a long way towards eliminating the need for the myriad of social programs and their bureaucracies. There would still be s need for Child and Protective Services and Disability Programs but SNAP and TANF,as we know them, could be eliminated
There would also still be a need for Unemployment programs too.
Marie – in theory, you are correct, but sometimes there just isn’t enough time in the day. For instance, a one parent household where the one-parent is working two jobs and still qualifies for SNAP. A living wage could help solve that problem.
The right wants the Gov to help RICH people (Like WalMart)
The left wants the Gov to help Poor People (Like WalMart employees)
Not much cross over here
Not sure how we get this done properly
Enter the “art” of politics
GOOD LUCK
Richard Nixon is best known for Watergate and his resignation from office. He was actually a more liberal president than some Democrats, hanging on to some of Eisenhower’s New Deal philosophy which ended with Reagan’s trickle down “welfare queen” vilification of the poor. Nixon actually wanted to end welfare and proposed a GAW (Guaranteed Annual Wage) that would cover everyone. It sounds like the New Zealand proposal. Nixon’s proposal failed to find legislative traction, unfortunately, and we have had vilification of the poor ever since, which makes good political fodder. I would be in favor of a GAW which would end welfare now, but don’t hold your breath given the present political configuration. Why solve such a problem when it is a vote-getting machine for the right wing? An argument could be made given our wage and wealth maldistribution that it is the rich who should be vilified for their destruction of demand in our underperforming economy, but that’s a topic for another day.
As a conservative, I wish no one ill. I want the poor lifted out of poverty in the model proposed by JFK. Frankly, after a half a century of insanity, I am receptive of almost any program that attempts to address the current abject failure.
For the life of me, I do not understand why Republicans turned sour on the EITC… Rewarding the behavior you “supposedly” want to see makes so much sense plus it totally stimulates the local economy!
Our current system of Medicaid is whacky and too often mean spirited. It requires people with disabilities to limit their income (meaning, they must stay poor and live on the margins of society) in order to qualify for medical assistance. Medicaid also encourages individual states, like Indiana, to develop their own nonsense programs. Medicaid makes little monetary nor general economic sense and forces people to live demeaning lives. There are many hints of positive solutions with the ideas that Nixon had and the current developments in New Zealand among the possibilities. I would propose the following: true universal health care (which takes all sorts of human justice evils off the table and would greatly benefit the entire economy), a $15 per hour minimum wage with a viable COLA, and a variable wage (income) floor for people who cannot work based on their individual living conditions. Supplement this system with required life skills classes in public schools and an extensive child and adult protective services program built around real in-the-field case work to identify and protect people in abuse situations using uniform federal standards. This combined system should also be backed up with a set of fundamental human rights protections built into federal law to stop the abusive nonsense so common among the states and to stop abuse by providers. The latter is rampant with too many hospitals and nursing homes, for example, treating impoverished seniors and persons with disabilities like commodities to exploit for profit. Obviously, this system would dump Medicaid and could be established as an extension of Social Security and Medicare with uniform standards throughout the country. What I have described clearly would not solve all human problems, we will always have to battle against the abuse of women, children and the elderly, we will always have to remain diligent in addressing homelessness and addictions, but something like this proposal could be the foundation for a system that is far better, that empowers people in the defense of their lives and dignity, that is more cost effective, and much more humane than our current system of chaos in health and human services.
Stepping back a bit, the conversation illustrates how neither of the major parties have any new ideas.
Democrats are wringing out variations on programs fifty to eighty years old, while Republicans are focused on using racial dog-whistle code to turn the clock back to the Gilded Age.
The rate of change in the day-to-day factors affecting all but the .1 Percent seems unprecedented in history, and yet our most heated social and economic policy debates involve state bathroom policy and prolonging white privilege.
Sometimes it’s helpful as a thinking tool to take the abstraction of money out of the picture and simplify things down to a small isolated village.
People there have the earth and sun as sources of matter and energy, plus time to invest. Being both diverse and social there’s a natural tendency for different people to invest their time at different endeavors and those things that are critical to everyone’s survival get done even though they may be unpleasant because critical roles get rewarded with respect and gratitude. So everyone’s social connection is reinforced by the required production and distribution of both necessities and diversions.
There have always been marginal contributors, the young, the old and the infirm but society knows that not taking care of them threatens everybody so risk is shared and those who can do extra do, and those who can’t are greatful. Social insurance.
Expanding that simple model to a global village of 7B is not such a stretch but handling simple sharing of goods to economics and banking and government and different currencies and multiple languages and shear magnitude obscures the inate simplicity of the village. But the fundamentals hold. It’s just easier to unclutter the picture at the scale of families or villages than at modern real world scale.
It’s absolutely clear that by figuring out and teaching/learning how the universe works and applying that to our needs we have production licked. In fact we over produce and consume. But we still struggle with distribution.
So how can the world distribute better without compromising important production? It happens all of the time naturally within families so can we make it work better than we have beyond that scale?
We have to or chaos will reign.
Even if we could get agreement to do a guaranteed wage, where would we set it? Currently, the poverty level for a family of 4 is $24,250. Such a family would require at least a 2 bedroom apartment. Even in a low cost city like Indianapolis, that’s not easy to find for less than $1,000. per month. That’s half the annual income for housing alone, and that doesn’t include any utilities that might be left to the renter. We really need to get serious about how much is enough. Those who have never lived at the minimum wage have no clue.
At huge risk of oversimplifying I believe that the human race lives or dies now on empathy. We have reached the anthropocene era which means our species is a major and determining force at global scale. We matter that much.
IMO the empathy that we are capable of which used to be sort of icing on the cake is now the most critical of our survival skills.
Ouch! Are we good enough?
Whole tribes have decided no, we aren’t, and have slipped into the grip of taking advantage of the ensuing chaos by defeating the competition. Strugglers in quicksand. They put all of us at risk in order to increase their odds.
Human life is in balance. Over dramatic?
It doesn’t feel like it.
Peggy, great question. Should we, must we, settle for poverty level existance?
I’m tempted to say like the rest of the world does.
I have stopped believing that all poor people should buy the cheaper whole foods and cook from the basics for health and cost reasons ever since I noticed that every Christmas family my workplace adopts needs pots and pans and other basic kitchenware I take for granted. Poor people do not have the things in their kitchens I take for granted. They either never had them, or they were left behind in a particularly bad, awful move, I guess. And I fear younger poor people never had to take home economics class and never learned even the tiny bit of useful knowledge I learned there. Whether they learned anything about cooking at home is just chance. Being really poor means not having even the basic, daily resources.
I read The Shock Doctrine and some other stuff by Friedman. This is the first I have heard of this idea from Milton. It seems to defy his own basic premises. Sounds good. Looks like Friedman had a heart.
Here’s a great global report card for how well we are doing on empathy; distributing what we produce.
http://inequality.org/global-inequality/
It seems crystal clear to me that mankind has thoroughly licked the challange of production and is making progress slowly but surely on distribution but our main tool has been fossil fuel energy which considering all of the consequences is now unaffordable.
Can we make the course change to living within our energy means without derailing production or more critically distribution?
Together, possibly. At odds with each other, unlikely to IMO.
What can you do? Consider purchasing your next car choosing one that uses much more of the energy you purchase rather than throwing it away unused.
A hybrid like a Prius.
I own a Camry hybrid. Almost as efficient as a Prius but absolutely no compromise from any other choice on comfort, reliability or function.
Or an electric like the just announced new affordable Tesla. Inherently efficient and a vote for the utilities of the world to ditch using fossil fuels as an unaffordable middle man between you and the sun.
We can do this.
Here is an explanation of the libertarian case for such an approach, not just from Friedman, but also Hayak and others: http://www.libertarianism.org/columns/libertarian-case-basic-income
My church has helped stock a food pantry for years and when we learned of so many needy
families elsewhere, we opened another food pantry, and there is still more demand than supply.
One of the surprises to many in our congregation is that food stamps don’t cover non-food essentials like toilet tissue, soap, detergent, personal hygiene items, diapers, etc. The current patchwork system of assistance has to be daunting to poor people without transportation and who are working multiple jobs that provide no free time to access public assistance. And as you and your readers have suggested, the assistance and the ‘system’ is frustrating, complicated, and demeaning. So the negative income tax has real appeal.
I’m pretty sure that if one knew all of the protections built into our state by state welfare systems, and all that we spend trying to insure it’s based on real need instead of lack of motivation, and all of the enforcement we deploy, one would conclude that we tend to be very careful with our money. Just like we try to be very careful about enforcing our laws or collecting our taxes.
Are their more efficient ways to be careful though? Or is the maximum efficiency to be even less careful and save the cost of it?
Governments only have the tools of regulations and enforcement. Are there better tools?
For sure the answer is yes. Nothing done by mankind cannot be continuously improved.
In the end though nobody knows the financial balance between what we spend and the good it does.
So, as always, we should just keep up gentle pressure relentlessly applied.
There are much, much bigger fish to fry.
I am all for a guaranteed minimum subsidy paid to everyone, regardless of income or circumstances. Can you imagine the administrative cost of our patchwork of assistance programs from food stamps to worker’s comp to unempmloymest insurance to SSI? Do you qualify today? Do you still qualify today? What about now? A universal debit card for every citizen, loaded once a month with a minimum subsistance payment, might very well cost less overall than what we currently pay to administer our current grossly inadequate, complicated, difficult to access, and demeaning system. It would eliminate the problem our uneducated (and most likely to be in need) have in figuring out how to navigate the system, and manage transportation to their administrative appointments.
It would be less likely to disincentivize work because it would not be lost to work. If you could only find part time, low wage work, you wouldn’t lose or decrease your benefits by accepting it. And frankly, contrary to much popular opinion, no one really enjoys eeking out life on a subsistance income. The chance to have a little more, without risking the only true security your family has, would probably have the opposite effect of incentivizing work, lifting more people out of poverty.
Of course, ultimately, we can’t conquor poverty in this country until we can agree that access to medical care is a right, not a privilege. Many people currently cling to their financial benefits only because their medicaid access is tied to it. All the states that refused to expand medicaid to the working poor under Obamacare insured that problem would continue. And even if all states had complied, we still have a terrible system of health insurance in this country. I’m not knocking Obamacare. It helped millions and was the best that could be accomplished in our political climate. But what we truly need is to take insurance companies and their need to make huge profits out if the equation and switch to a single payer system for everyone.
Single payer healthcare along with a guaranteed citizen subsidy for all could lift millions out of poverty and, by eliminating massive administrative costs, potentially be viewed ry cost effctive. Andbefore you scream about higher taxes, remember what youwouldvet in return.
Tell me Miss Moore, is that how you spend your grocery money or do you just advise others?
Pete, you sure as hell have a fabulous and extensive vocabulary. Wow!
Pete, I have maintained for many years that we spend more money trying to prevent poor people from stealing public money than they would steal if we did nothing. On the other hand, what’s the point of being wealthy if the poor don’t suffer?
I think there are two basic concepts we all need to consider that the left and the right (in the US) both choose to ignore:
1) Disability is a spectrum, and we all are disabled. The right wants to pretend that everyone gets what he deserves, thus their vengeful god makes sense and thus the poor were somehow naughty to get where they are. The left wants to pretend some people are perfectly rational, intelligent, able navigators of the world while some cannot possibly make it on their own. Right: total lack of empathy based on ridiculous fairy tales turned into societal assumptions. Left: Identity politics. The reality, of course, is that life is hard and we all suffer, especially when we are young and ignorant, or old and declining, or physically disabled, or just normal and human and having a rough time. Addressing the underpinnings of western civilization and the philosophies behind our enlightenment era constitution would seem to be necessary before we can have an intelligent conversation about poverty.
2) Tribalism. 6 billion people, so we are still only discussing 5% of the problem. It seems we have difficulty in treating all the people in the US as part of the family, so we have a long way to go before we can have empathy for others as well, but any real approach to poverty has to acknowledge that the problem extends far beyond the US borders. Solving the problem will ultimately depend on international politics not being played as a zero sum game (I become wealthy by impoverishing you), but developing a worldwide movement toward sustainability including sensible usage of resources, population control, and basic respect for all.
Paul, very good!
Thank you Irvin.
A point that can be more clearly shown by the isolated village allegory is that, at the end of the day, month or year what has been produced for distribution by everyone in the village is the number of producers times their average productivity. Divide that by the number of consumers and you get something proportional to their average standard of living.
As time frame for comparison most people can relate to Common Era, the time of Christ, the time of our Revolutionary War, the time of our birth and now just because those times are familiar from religious and secular education and experience.
Not much happened between the Common Era and American Revolution in terms of life style. Around 1800 years.
From the Revolution to when I was born the energy per person consumed, and therefore I would propose the average life style, went up 6.5 X. It was almost all due to harnessing fossil fuel energy.
In my lifetime the same measure of energy use went up by 3 X for 3 X the number of people in the world. Why? Mostly mothers in the workforce and computer technology.
As I said I earlier, we surely have production figured out and licked.
However we’re facing existential level problems the biggest of which is that we have to, and quickly, replace the middle man between us and the sun, our only real source of energy, fossil fuels, with something that leaves what’s remaining in the ground. When and if our accounting system accurately reflects their total cost it’s unaffordable to continue using them.
At the same time we have to figure out how to solve the distribution problem hopefully by maintaining our lifestyle while accommodating 50% more people.
We’re going to have to be collectively really smart to pull that off. To whatever degree we fail the impact will be on everyone’s lifestyle.
This forum seems as good as any to pose this question, to query the older readers for some feedback.
Last week I received a notification from the Social Security Administration advising me that my monthly Social Security benefits would decrease from $2400 per month to $1600 per month based on my 2015 IRS filing. My husband also received a similar notice. So, before I make an official request for information regarding this sudden and unexpected reduction in benefits, am I alone in receiving such a notification?
I sure hope that you post the answer when you find it.
I’m getting my first ss check this month. I haven’t received any notice. I understand that benefits are based on what I paid into the SS system for 41 years, not dependent on any other factors.
The is about dollars, not welfare, carfare, busfare, trainfare, planefare…and means fare well, to fare well and not to dollar well, even to count, to budget, to do the assigned job of allocating the budgeted dollars for the expressly stated payee. ” We” is all sides of the Earth, each human life being equal to one life only. Education and Human Services are still wed in Indiana job descriptions for the Secretariats “WE” have no votes to make at all, and there never was a Poor or Rich secretary, etc. Right now or absolute best minds are trying to deal with the same HUMAN INTERESTS areas as ever, as small mammals do. So do away with Health and Human Services jobs in Indiana and contract those as have done the board members whenever, from other schools’ graduates, K-16 or just 17-20 of a better State’s.
My stepmother Went to The Indiana School for the Deaf after normal school in Virginia to get an easier class of students to deal with in communications, almost all headed to DC http://www.gallaudet.edu/tip/english-center/vocabulary/suffixes-to-know.html#Verb_Suffixes