Saturday, March 8, 2014

Approaches to Basic Income and Poverty

Matt Yglesias is skeptical of the jobs guarantee:
It seems to me that a jobs guarantee of any kind would not obviate the desirability of the following:
  1.     Some unconditional cash public assistance because this is the simplest way to   help people in need.
  2.     Some noncash public services because club goods and public goods are more efficiently organized this way.
  3.     Balanced monetary policy that generates strong demand for labor.
  4.     Wage subsidies to further lift low-end incomes will creating growth-friendly macroeconomic conditions.
But if you had those four things, would there also be a need for a jobs guarantee? It seems to me that there wouldn't. Any funds available for the jobs guarantee would be better spent on 1, 2, or 4 and broad labor market conditions are better addressed with 3. Obviously there's ample room for direct or indirect public-sector employment under any policy paradigm (gotta have cops, teachers, bus drivers, building inspectors, etc.), but trying to use public sector employment as a direct tool for boosting incomes or creating full employment seems messy and unnecessary.
A "Job Guarantee" Sounds Like Bad News (Slate)  I think he's suffering from the delusion that the 'private sector" will put people to work in socially useful jobs if only the right technocratic management is in place. In a shrinking/constrained economy this may not be the case. Such a guarantee can help ease the pain of contraction and be more amenable to our sensibilities than giving people money for no work.

Want to end poverty? Brazil’s answer: Give people money (Washington Post)
In 2005, Utah set out to do something very different than the typical strategy of getting the hard-core homeless off drugs and alcohol, and making them jump through enough bureaucratic hoops to obtain some state assistance and finally get what they need most: permanent housing.

Utah started a pilot program that took 17 people in Salt Lake City who had spent an average of 25 years on the street and put them in apartments. Caseworkers were assigned to help them become self-sufficient, but there were no strings attached – if they failed, the participants still had a place to live.

The “Housing First” program’s goal was to end chronic homelessness in Utah within 10 years. Through 2012, it had helped reduce the 2,000 people in that category when it began by 74 percent. Lloyd Pendleton, director of Utah’s Homeless Task Force, said the state is on track to meet its goal by 2015, and become the first state in the nation to do so.
Wyoming can give homeless a place to live, and save money (WyoFile)
When Professor Costello published her first study, in 2003, the field of mental health remained on the fence over whether poverty caused psychiatric problems, or psychiatric problems led to poverty. So she was surprised by the results. Even she hadn’t expected the cash to make much difference. “The expectation is that social interventions have relatively small effects,” she told me. “This one had quite large effects.”

She and her colleagues kept following the children. Minor crimes committed by Cherokee youth declined. On-time high school graduation rates improved. And by 2006, when the supplements had grown to about $9,000 yearly per member, Professor Costello could make another observation: The earlier the supplements arrived in a child’s life, the better that child’s mental health in early adulthood.
What Happens When the Poor Receive a Stipend? (New York Times).
In the United States, the idea of handing out unconditional government allowances is seen, understandably, as a nonstarter, despite enjoying some recent buzz among policy wonks. If nothing else, in today’s political environment, it just sounds too much like a socialist fantasy. But the idea has a deep legacy in the United States that almost uniquely stitches together figures on the left and right: Its prominent supporters have included Martin Luther King Jr. and John Kenneth Galbraith, and a version initially suggested by free-market economist Milton Friedman nearly became law under President Nixon. Recently, conservatives like Veronique de Rugy, a senior research fellow at George Mason University’s Mercatus Center, and Charles Murray, author of “The Bell Curve” and a scholar at the American Enterprise Institute, have stepped forward to support the idea; it’s also been embraced by the “Occupy”-affiliated academic David Graeber.

“You usually don’t have people from different ends of the political spectrum getting on board with the same sort of program,” said Brian Steensland, an associate professor of sociology at Indiana University and the author of the book “The Failed Welfare Revolution,” about how basic income went from being a marginal academic idea to a congressional bill and back again. “There’s just something in there that’s really appealing for people from a whole range of intellectual, philosophical, and economic perspectives.”
Should the government pay you to be alive? (The Boston Globe) It sounds radical, but the ‘guaranteed basic income’ almost became law in the United States—and it’s having a revival now, with some surprising supporters.

There is historical precedent:
In 1795, the parish of Speen, in Berkshire, England, embarked on a radical new system of poor relief. Due to the ruinous French wars and a series of poor harvests, grain prices were rising sharply. As bread was the staple food of the poor, rising grain prices increased poverty and caused unrest. Concerned by the possibility of riots, the parish decided to provide subsistence-level income support to the working poor. The amounts paid were anchored to the price of bread. Each member of a family qualified for a payment, so the larger the family, the more they received. In effect, it was a system of in-work benefits.

Subsistence-level income support already existed for the non-working poor. The Poor Laws, first introduced in Elizabethan times, distinguished between different categories of “poor” and treated them differently. At the time that the Speenhamland system was introduced, the old, infirm and children were placed in poorhouses, where they were cared for and were not expected to work (this was known as “indoor relief”), while the able-bodied poor were expected to work for their benefits (“outdoor relief”). There were a variety of measures forcing the unemployed to work, of which probably the most hated – and economically the most disastrous – was the roundsman system.  Unemployed labourers (“roundsmen”) were “sold” to farmers at below market rates, and the parish topped up the wages to subsistence level. It was in effect a jobs guarantee.

 But the Speenhamland system did not make working a condition of benefit eligibility. Its combination of existing out-of-work relief – with or without job guarantee - with a new system of in-work benefits amounted to a basic income. The level of relief was the same whether or not family members were working, and because of concerns that people should not be discouraged from working, it did not taper off as wages rose.

And it worked. The Speenhamland system did relieve poverty and malnutrition, and prevent riots – which was its purpose. Because of this it was widely copied, and Pitt the Younger even tried to write it into national legislation. But it was not without its problems and its critics...
An Experiment with Basic Income (Pieria)
First, while work may be necessary to “dignity, mobility and social equality” in a market society, it certainly isn’t sufficient. For unionised US workers in the mid-20th century, earning middle-class incomes in relatively secure jobs and expecting better for their children, work was, arguably both necessary and sufficient to achieve a fair measure of these things. But an at-will employee, juggling two or three tenuous jobs that pay $7.25 an hour, and looking at a steady decline in real income, is scarcely getting much in the way of dignity, let alone mobility or social equality.

Equally importantly, market work isn’t the only kind of work people can do, and certainly not the most valuable. Most obviously, there’s the raising of children. The US the developed countries that does not provide any kind of paid parental leave, and even the legislative provision for unpaid leave (12 weeks a year for mothers in firms with more than 50 employees, nothing for fathers) is incredibly stingy. The idea that the ‘rugged individualists’ who block any improvements to these conditions actually care about the dignity of the working class is simply laughable.

I’ll have a bit more to say about the kind of technological determinism that seeks to explain labour market polarisation as arising from computers and the Internet a bit later. For the moment, I’ll repeat the conclusion of my Aeon essay that a response to technological change that will preserve the link between work, dignity and equality will require both a reduction in total hours of work and an expansion in the range of social contributions regarded as work, beyond those that generate a market return.
Work and beyond (John Quiggin, Crooked Timber)

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