Universal Allocation

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* Book: - L'Allocation Universelle. Y. Vanderborght et P. Van Parijs. La Decouverte,

URL = https://www.editionsladecouverte.fr/l_allocation_universelle-9782707145260


From the reading notes of Michel Bauwens, 2006:

The universal allocation is a income given by a political community to all its members, on a individual basis and without any control or demand for reciprocity.

Chapter 1: History

It was mentioned for the first ime in Thomas Moore's Utopia in 1516

J. Vives, in Louvain, outlined the very first detailed plan, for the Bruges' city council, but his proposal demanded work in exchange and was the inspiration for the poor laws and the workhouses in the UK

In 1883, Bismarck, the German Chancellor, generalized social insurance, inspired by a proposal from Condorcet (1795). It excluded the non-salaried however, and distinguished assistance from insurance. However, it is the start of what would become the 'social state' or the 'welfare state'.

Beveridge, in a report from 1942, re-introduces the idea of assistance, in the form of a minimum wage for households, which will be implemented by the National Assistance Act of 1948. It will be followed in Europe (Belgium, 1974). But, these measures are conditional (they include the control of resources, family conditions, willingness to work).

It would crop up regularly in the 19th cy and was taken up by John Stuart mill. But it was not really debated until after 1918 (by Bertrand Russell f.e.), pushed by Labou in 1920. But Beveridge's social insurance plan, followed throughout Europe, would settle the debaete for decennia The debate would restart in the US in the 1960s.

It came in different flavors:

- 1) the negative tax proposal by Milton Friedman. It's overt aim was to simplify social transfers ('Capitalism and Freedom, 1962) (x part of the taxes, in a flax tax regime would not have to be paid, favoring the poorest)

- 2) Robert Theobald's 'Ad Hoc Committee on the Triple Revolution: a minimum income to insure consumption in the context of ongoing automation

- 3) James Tobin, in 1965, proposes a minimum income that is higher than current transfers, to reduce poverty. This was expressed by the 'demogrant', a cash outlay incorporated in the McGovern platform of 1972.

McGovern would lose these elections and a alternative negative tax proposal by Nixon was derailed by Watergate.

The debate mostly continued in Canada, with many reports on a 'annual guaranteed revenue'. The topic again disappears until the 1980s.

The new debate was especially strong in the Netherlands, where both a party (De Radicalen) and a union (Food union, the 'Voedingsbond') supported it. In Germany, the Greens take the lead. In France, it is the intellectuals such as A. Gorz and J.M. Ferry. They see it as a means to develop a socially useful quarternary sector. The BIEN would be instrumental in federating these hitherto isolated efforts, and rapidly evolved from a Belgian ('Collectif Charles Fourier') to a European, to a world network. In 1982, Alaska launched its Permanent Fund (A.P.E.C.), with oil revenue used for paying out a national dividend to all its 6-month plus residents.

Chapter 2: A Pluralist Idea

The basic income exists in a number of variants:

1. As an income

- A. It can exist as cash, "in nature", or in a number of different combinations. It is most often conceived as a complement, and not as a substitute for other transfers, or for other services (education, etc..)

- B. Periodicity. It can be given one time only as a capital allocation, or every month, 3 months , or annually as in Alaska

- C. How much ? The debate is often: should it be more or less than the poverty limit ? For reasons of realism, many proposals start at the lower end (EUR 200 to 500), but aim to eventually cover basic needs (estimated at 750 EUR in France). Just as important is its financing. If it replaces other transfers, it may make the poor worse off.

2. Given by a political community

The resources must be publicly controlled, are most often associated with a nation-state, but not necessarily (Alaska). It could be a sub-national or supra-national entity. There are various proposals to extend it to a global scale.

- A. How to finance it?

           - From the general state budget ?
           - From direct or indirect (VAT) taxes ?
           - Real estate tax or tax on the use of energy and/or natural resources

The idea here is that if private parties are allowed to use public resources, they should pay and everybody should get a part of the rent. This is called 'distribution' rather than redistribution of public funds.

3. To all its members on a individual basis.

- A. to citizens or residents ?

           - This depends on political vs. economic (combating poverty f.e.) motivations
           - What categories should be excluded ? (prisoners)

- B. Modulation by age

       - Should one start at adulthood, or at birth, eventually with growing amounts according to age.

- C. Individual or household ?

       - The authors reject the idea of differentiation by household as incompatible with the philosophy of unconditional basic income.

4. Without control of resources

- A. A priori transfer or a posteriori ?

  • Because minimum wage provisions take into account household revenue, and only want to fund the 'gap' or difference, they are 'a posteriori' funding mechanisms.
  • The basic income by contrast is a priori. If the financing is exterior (oil fund), everyone benefits. If financing is internal through income tax or expenditure tax (VAT), the richest finance not only their own BI but also that of others.

- B. Difference between basic income and negative income tax

  • This is the opposite of a positive tax, as in this case, it is the fiscal authorities who pay the money out. Mostly, the scheme works as a 'credit', from which the due taxes are deducted, and it involves a ceiling, from which taxable income is counted. Anyone earning less will therefore receive a variable sum.
  • This credit can only be given after a fiscal calculation, unlike the basic income. There are other differences as well. It is also different from various other tax credit schemes. These are not 'variable', but when juxtaposed to minimum revenue, they can be interpreted as signposts to a basic income.

5. Without any conditions (no counterpart)

Conditional schemes do not satisfy the requirements. But some schemes, asking social participation with minimal control, may come close.

In Conclusion: There are therefore 3 basic schemes that society can choose from:

       - 1) social insurance based schemes that are given in exchange for contributions
       - 2) aid to the poor, in the form of conditional minimum income schemes
       - 3) unconditional basic income proposals

Chapter 3: A Just Idea ?

What are the justifications for a basic income ?

The most common are as measures against poverty and unemployment; i.e. they are economic arguments; But these are always also embedded in a conception of a just society,ie. moral arguments.

The Poverty Argument

Would targeted, means-dependent measures, which gives money only to the poor, not be cheaper and more efficient than a unconditional basic income ?

   - 1) As long as the rich pay more (in absolute terms), the measure is not more expensive
   - 2) part of the cost is because of the replacement of other programs (zero-sum)
   - 3) the remainder can be financed by the rich
   - 4) the administrative costs are much lower
   - 5) since it is for all , it is easy to access and does not exclude
   - 6) putting unmotivated workers at work, if it were asked in exchange, would carry a high social cost

Is it possible that higher taxes, may discourage some economic activity? This is seen as the most serious argument in terms of the efficiency of basic income for all. However, this may be mitigated through the reduction of unemployment and a guaranteed consumptive expenditure.

First, it helps the unemployed and allows them other activities. Second, it doesn't discourage work, since 'cumulation' (additioning of incomes) is allowed, which reduces the famous 'unemployment trap' (the argument that employment insurance discourages work for wages below the insurance). In this system, labor is always encouraged.

Finally, the measure can be seen as 'structural support' for the poorly paid sectors, those that are outcompeted through globalization. The unconditionality allows workers to refuse degrading work. It is also a kind of replacement for a generalized shorter working week, instead making it more attractive to chose part-time jobs. This respects the freedom of those who would want to work longer. By creating flexibility between work and family obligations, and study, it will increase the innovative potential of the economy, allowing workers to adapt easily. It will reduce social exclusion, and by increasing parental time, will greatly benefit the health of the children.

Is it exploiting the work of others ?

Is it unjust that able people live off the work of others ?

The answer:

   - 1) an obligation to work is only justified if there is also a right to work, but the latter is much too costly
   - 2) differentiating a refusal to work from an incapacity to work is very difficult
   - 3) a lot of work, such as homework, is now unpaid, but a homeworker salary would reinforce gender inequality.

The above combination of arguments give pragmatic reasons to support the basic income as 'better than the alternatives', despite the potential injustice cited above.

A sidebar notes how the measure would benefit women more than men, and is therefore regularly supported in feminist publications. Others in the women's movement are worried that a renewed trend towards homeworking might increase inequality in the job market.

Social Justice Requirements

Left libertarians support the measure as a form of rent to the whole human community, as a compensation for the private appropriation of land, but for that reason, insist that the measure be funded exclusively in that manner.

The contradictory position of Rawls is then explored. It has a problem with paying those unwilling to work. But a related egalitarian-liberal tradition is more open to the proposal.

It is noted that people with special needs (the handicaped f.e.) need special support and that this would lower the level of the basic income. Nevertheless, in developed countries, it can still be substantial.

Chapter 4: Un idea for the future ?

What are the chances of its implementation ?

Quite a few European countries now have conditional minimum income systems, with sufficient drawbacks to make the basic income a debatable issue. Many , official reports have been made. Yet, opposition is such that an easy and radical adoption is unlikely. However, it may gradually come in through the back door.

What forces are allied pro and con ?

- Most unions are against it, seeing it as a neoliberal maneuver to depress wages - But in the Global South, more are in favour, an example being the South-African COSATU - Many organizations of the unemployed favour it - Greens are divided but many support it. However, they nave never taken action on it, even when participating in governments - 'Left liberal' parties, in the European sense, are also favorable (Libdems, Vivant) - After the debate of the 1930s, it was eclipsed by the welfare state, but it is cropping up again since the mid-90s. Lula's PT signed the very first basic income law ever. - 'Third Way' forces (Blair) have promoted the concept of an 'active' welfare state, but one that is based on control and suppression. In contrast, the BI offers an emancipatory version, aimed at eliminating the obstacles to inclusion. - The non-Communist radical left also regularly supports the idea (incl. the German PDS)

Transition Strategies

In conclusion: there is wide debate, but no consensus. Are there perhaps transition measures ? The national context is important here.

Amongst the possibilities:

   - negative family tax
   - individual and reimbursable tax credit
   - a partial basic income
   - a participation income