Universal Basic Income: A Solution to Inequality, Economic Instability, and Climate Change
A guaranteed monthly income can be fully funded through charges on carbon emissions, financial market transactions, and extractive practices, says PERI's James K. Boyce
A guaranteed monthly income can be fully funded through charges on carbon emissions, financial market transactions, and extractive practices, says PERI's James K. Boyce
KIM BROWN, TRNN: Welcome to the Real News Network. I’m Kim Brown in Baltimore.
Now recently there’s been an increasing discussion of the possibility of creating a universal basic income. An idea of a guaranteed monthly income for all Americans. Now this is a relatively old idea that has found advocates from across the political spectrum. From conservatives as well as liberals and republicans as well as democrats in a time when bipartisan appeal is really a rarity. However the big question always remains how to fund such a relatively expensive program?
Well here to talk about this is James Boyce of the PERI, the Political Economic Research Institute at the University of Massachusetts at Amherst. He recently coauthored with Peter Barnes, a piece for the Triple Crisis site called $200 Dollars a Month for Everyone? Universal Income from Universal Assets. There’s a link there that you can check out. Some of our questions are getting ready to get started now so James thanks again for joining us.
JAMES BOYCE: Thanks for having me.
BROWN: So, James what is the universal basic income?
BOYCE: Well the basic idea is that people should be able to receive a certain amount of money as a guaranteed source of income. It should be paid out to every man woman and child. It could be paid monthly, it could be paid quarterly, it could even be paid annually but probably monthly is the best way to do it and the way that this would be done in a country like the United States would be primarily through electronic transfers into bank accounts or on cards which is the way that most recurrent federal payments to individuals are dispersed. Social security, veterans benefits, etc. are all these days done electronically.
So that’s the basic idea.
BROWN: So why have so many people been talking about this and really the big question remains, what are the big obstacles to making sure the guaranteed income for all comes to pass?
BOYCE: I think the reason people have been talking about it is that it really has a lot of appeal to a lot of people including to even some of our politicians and political leaders. On the conservative side of the political spectrum it’s appealing to people who would like to simplify the ways in which federal support to individuals in households is provided to move away from the sometimes byzantine bureaucratic procedures that we currently have. Also to move away from means testing which requires a lot of administrative effort to figure out who’s eligible and who’s not eligible to receive these payments. Universal basic income like social security or Medicare is universal. It’s available to everybody.
Because it’s universal and provided in cash, it avoids the kinds of charges of paternalism that sometimes are levied particularly by conservatives against government support programs for individuals and families. On the liberal end of the spectrum I think it’s appeal and it’s increasing appeal stems from the realization that middle class jobs aren’t really paying enough anymore to really provide a secure livelihood for many families. That coupled with the realization that income inequality has been growing across the country has led to a search for new ideas of ways to try to some extent at least, level the playing field and support households in the face of uncertain and sometimes sluggish labor demand.
BROWN: So James, how can the first problem, finding the money to actually pay for this, be solved?
BOYCE: Well, that’s of course the biggest stumbling block. There’s a great deal of political resistance in the United States to the idea of taxation especially for redistribution. So on the one hand, you have the appeal of universal basic income but on the other hand, you have the opposite, the resistance to the idea of taxation for this purpose.
What Peter Barnes and I suggest in the piece you mentioned is a different way of funding the universal basic income. Funding it form what we call universal basic assets. That is to say types of wealth that we all own in common, really in equal and common measure but that currently we don’t receive income form because we don’t charge for using this wealth, for using these assets. Let me give you two quick examples. One is the limited space that we have in the atmosphere for absorbing various kinds of pollution, like greenhouse gases, carbon emissions which are the main source of global climate change.
Many economics and environmental policy folks have recommended that we put a price on carbon emissions as a way to provide incentives to reduce our use of carbon, increase investments of energy efficiency in renewable clean energy etc. But one of the questions that that poses is where the money will go. If we put a price on these emissions which is ultimately going to raise the price of gasoline and electricity and so on, who’s going to get the money? The money is not going to disappear. And what we propose is that money should be returned to the people, to the public. It shouldn’t go to the government. It shouldn’t go to the polluters as windfall profits through cap and trade which gives away permits for free and lets firms trade among themselves.
Instead there should be either an auction system for permits if there’s a cap or a tax with clear targets for emissions reductions that lead to automatic increases in the tax level if those targets aren’t achieved and the money that’s collected should go straight back to the American people in the form of equal per capita dividends based on the principle that we all own our country’s limited carbon absorptive capacity, our share of the environment in common and equal measure. We’re the rightful owners. We should get the income from using that wealth so the system would be people pay in proportion that their use of that carbon sink and we receive back the money based on the principle of common ownership.
A second example, and I’ll try to be quicker on this one, is the financial and legal infrastructure that helps to underpin our economy. This is not natural wealth. In this case it’s socially created wealth. But that wealth is really what underpins the possibility for people to make great fortunes in our country and some of people who’ve made great fortunes like Warren Buffet have explicitly recognized this.
We believe that by charging for the use of that infrastructure for example by having a fee on financial transactions, a modest fee, that again could have some beneficial effects in terms of in this case, stabilizing financial markets but it could also generate the income that would be used to provide basic universal basic income to everyone in the country.
BROWN: James don’t we already see examples of variations of this in some of the gulf states in the Middle East where citizens receive some sort of stipend or some sort of dividend of the revenue generated from oil and gas sales and doesn’t Alaska have something similar to this as well? Obviously in a different direction but the same premise that each citizen in the state or each citizen in the given country receives a check from the state because of the money that they’ve been able to generate off the state or the country’s natural resources?
BOYCE: That’s right. We don’t have to look overseas to find it. We only have to look as far as Alaska which by the way as you know is a red state. Alaska again testifying again to the wide political appeal of such a policy. When Alaska started pumping oil, it’s governor who was a republican named Jay Hammond, proposed the creation of the Alaska permanent fund and royalties from the extraction of Alaska’s oil go into that fund and among other things, the fund pays out to every woman, man, and child in the state of Alaska every year, an annual dividend, their share of the return to the extraction of Alaska’s oil based on the principle that that oil belongs to all Alaskans. It’s the commonwealth of the people of Alaska.
It’s not a difficult thing to do this. If your viewers want to look, just Google Alaska Permanent Fund. You can go to the website and see the little PDF form that Alaskans fill out in order to qualify for their dividend. The highest payout which was about $2,000 per person a year a few years ago was under Governor Sarah Palin. This is a popular program amongst Alaskans. As you can imagine. Across the political spectrum.
Now there is one difference I should mention between the Alaska Permanent Fund and what Peter Barnes and I are proposing with respect to carbon emissions and that is the following. The Alaska permanent fund because it’s based on extracting oil, gives Alaskans and incentives to want to extract more oil. Its one of the reasons why oil extraction in Alaska is popular. It provides revenue and income for everybody. Across the state, everybody. Not just the people involved in industry. Everybody thanks to the dividends from the permanent fund. So that’s an incentive to extract more oil. Quite the opposite, putting the price on carbon emissions provides and incentive to burn less oil and to burn less coal and natural gas as well. Because it gets more expensive to do it, you don’t burn as much of it.
So the money in this case is coming not from pumping more but from burning less. In fact because the rate at which prices would rise is faster than the rate at which emissions would be reduced. The tighter the caps, the higher the price on the emissions, the more money there will be to distribute to the people. So what such a system would create would be incentives for the American people to demand tighter caps, higher prices on carbon because that would be mean more money in their pockets.
BROWN: But what about the potential of people being desensitized towards working? You know if people are getting a check every month, as some conservatives have criticized liberal governments, etc. about the so called nanny state, wouldn’t this be in effect, creating a nanny state?
BOYCE: Not at all. I think that’s a really good question to pose though because it does come up periodically. So we’re not talking here about a nanny state. Nor are we talking here about handouts or free gifts. All we’re talking about is returning to people the money that comes from uses of assets we all own or should own in common. So, it’s not about handing out free money. It’s about not letting people use those assets for free. That’s the real handout.
When people can use our atmosphere for free, when people can use our financial and legal infrastructure that we have created together for free, we’re failing to collect. We’re giving a handout to them. This is about paying as you go which is really I would say part of the American way. Now as far as incentives to work go. Look the amounts of money here are not going to be so huge that people aren’t going to have an incentive to work to provide a better standard of living for themselves and their families. In our proposal, what we’re talking about is maybe $200 per person per month. So, that’s $1,200 a year. For a family of 4 that’s getting up around $5,000. It’s nothing to sneeze at. It’s real money. It’s a big help to struggling families but it’s not so much that people would not want to work. Now it’s true that it might be that some people would no longer have to do work that they really hate or at least not do it as cheaply as they now do. If that happens, that’s a good thing. It might also be that some people are now able to do work they really love even though it doesn’t pay quite as much and that’s a good thing too.
So I wouldn’t worry too much that we’re going to become a nation of slackers just because we’re charging for use of the wealth we own in common. I think on the contrary, this actually helps to enable people to the kinds of work that they really want to do.
BROWN: Indeed and as you said, $200 a month is hardly an incentive to stop working all together given that it would not even pay everyone’s rent. But how high would such a program have to be to give a real impact without draining the economy?
BOYCE: Well it’s not really draining the economy because the money that’s being paid out is being paid for uses of assets that we already have. I’d say quite the contrary from draining the economy as I’ve mentioned. Charging for use of these things is actually going to make our economy healthier because the basic principle on which a market based economy is organized is that prices reflect values. Prices reflect what things are worth.
If we don’t put a price on for example, dumping greenhouse pollution into our atmosphere we’re failing to send a price signal and we risk degrading that resource, that atmosphere. We’re not only failing to collect what is due from uses of a resource that we all own in common but we’re also facilitating the abuse of that resource.
Similarly with financial transactional fees. Charging a modest fee for financial transactions for sales of derivatives and stocks and so on. The amount of money that’s collected could be quite substantial. Could be more than the very modest calculations that we’ve made in our piece depending on the scale of the fees. But the effect of that would not be really draining to the economy. The effective of that quite the contrary would be to reduce the volatility in financial markets which actually destabilizes the economy and could have some really unfortunate effects. So the ways in which we would be raising money are ways that would actually, I believe, strengthen our economy rather than weaken it.
BROWN: So James you’re an economist, I know you’ve crunched the numbers. How much money would have to be raised n order to pay for this?
BOYCE: Well if you’re talking about $200 a month per person. If that were the – that’s sort of the illustrative number we use in our piece, partly just for the convenience that’s what you get in the game of monopoly when you go past go and it helps to ensure that people stay in the game the same way this would help to ensure that people are a part of our economy. To generate $200 a month or $1,200 a year for a population of a little over 300 million people in the United States would be about $300 billion dollars a year.
So that’s significant money. It’s money that we could obtain through the types of user fees that I’ve described. By charging for carbon emissions. By charging on financial transactions and similar kinds of policies by charging actually for the use of publicly owned resources, our public forests and our public lands are used now for forest harvesting and mineral extraction and often the prices paid for those resources are pretty low due to what I would describe as sweetheart deals between the extractive businesses and the government. By charging the real value of those resources, again we could generate money.
So I don’t think it would be, by any means, impossible to generate incomes large enough to provide a significant universal basic income to every American. I think we could do it. It’s just a matter of making our political leaders take action. Making them in a way put our money where their mouths are. Fredrick Douglass once said, that power doesn’t concede anything without a demand. It never has and it never will. I think that’s true. If we’re going to make this idea a reality, an idea which is as I said, has really wide support across the political spectrum in an era where that’s unusual and where we need ideas and policies that unite us rather than dividing it. I think we’ll have to get together to make it happen. We’ll have to get together and demand that our representatives in congress on both sides of the isle, pass the legislation that would create universal basic income from our joint ownership of universal basic assets.
BROWN: If you want to conceptualize economics you can’t go wrong with the monopoly reference. We’ve been speaking with James Boyce of the Political Economic Research Institute at the University of Massachusetts at Amherst. You should check out the new study he coauthored with Peter Barnes, it’s a piece actually. It appears on the Triple Crisis site and it’s called $200 Dollars a Month for Everyone? Universal Income from Universal Assets. James we appreciate your time today. Thank you.
BOYCE: It’s been a pleasure. Very nice to chat with you.
BROWN: You as well. And thank you for watching the Real News Network.
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