Universal Basic Income as the Foundation of Freedom

I favor a Universal Basic Income (UBI) because it offers financial security and predictability, which in turn provide freedom from necessity. This “freedom from” is required for any meaningful “freedom to“. By allowing people to effortlessly and foreseeably pay for the material resources that they need for a minimally decent life, a UBI liberates them to pursue the goals they have set for their lives – or even set these goals in the first place. Life’s pursuits all too often get pushed aside by urgencies, necessities and bouts of bad luck. The struggle to survive may even imply an incapacity to formulate goals.

What matters … is not only the protection of individual rights, but assurances of the real value of those rights: we need to be concerned not only with liberty, but, in John Rawls’s phrase, with the “worth of liberty.” At first approximation, the worth or real value of a person’s liberty depends on the resources the person has at her command to make use of her liberty. So it is therefore necessary that the distribution of opportunity – understood as access to the means that people need for doing what they might want to do – be designed to offer the greatest possible real opportunity to those with least opportunities, subject to everyone’s formal freedom being respected. Philippe Van Parijs (source)

There’s another type of “freedom from” that a UBI would achieve: it would liberate us from alienated labor (to use a strong term). I personally believe that the alienating characteristics of our current system of work are sadly ignored (read this and this). A basic income gives people the freedom to turn down unattractive work and to start cooperative ventures that are more rewarding, in the sense of more pleasant but also more in line with the goals people have set for their lives.

As a pleasant by-product, we would be able to shake off some recurrent criticisms of our existing welfare systems:

• No more discussions about welfare queens, social security fraud, the undeserving poor, a culture of poverty, etc.
• No more government intrusion in the private lives of welfare beneficiaries, no more means testing, fraud investigations, social security inspections, income audits, family structure controls etc.
• We would be able to implement drastic reductions in the level of regulation, legislation and government bloat inherent in our current social security systems. A smaller government, suitably defined, may also lead to an increase in the overall level of freedom.
• Healthcare consumption would become more wise and efficient since people have to use their basic income to pay for all of their non-catastrophic health problems. (Perhaps this rationalization could offset some of the fiscal criticism leveled against a UBI).
• Unemployment would no longer be a problem: the concept of unemployment would become meaningless.

Some additional advantages of a UBI:

• We would no longer be fixated on economic growth since the main justification of growth is its perceived role in the reduction of unemployment. Hence we would perhaps be able to meet some environmental concerns.
• Increased gender equality. Wives, often still the main caregivers within families, would be less economically dependent on husbands if they have a basic income. With less dependence comes more freedom and equality. Women – as well as caring men – could even use their basic income to start up cooperatives for the caring function, making use of advantages of scale and becoming more economically active outside of the home. That as well would increase their independence.

The Causes of Poverty (59): Stress

Stress is often a consequence of poverty, but it can also make poverty worse. Esther Duflo and Abhijit Banerjee have noted in Poor Economics that

[t]here is a strong association between poverty and the level of cortisol produced by the body, an indicator of stress. Conversely, cortisol levels go down when households receive help. The children of the beneficiaries of PROGRESA, the Mexican cash transfer program [later renamed Oportunidades], have, for example, been found to have significantly lower levels of cortisol than comparable children whose mothers did not benefit from the program. (source)

Cortisol is a hormone, and high levels of it can cause brain dysfunctions which in turn make it difficult for affected individuals to escape their economic predicament.

The prefrontal cortex, for example, which is vital for suppressing impulsive responses, is rendered less effective by high cortisol levels, making us more likely to take hasty, ill-considered decisions. “When experimental subjects are artificially put under stressful conditions,” Duflo and Banerjee note, “they are less likely to make the economically rational decision when faced with choosing among different alternatives.” (source)

This poverty cycle or poverty trap can only be broken when external interventions reduce stress levels. For example, poor people can be given easier access to credit or insurance, which will reduce their fear of the future. They can be given a basic income. Etc. Perhaps cortisol-reducing medication is also an option.

More here on the way in which brain dysfunctions can cause poverty. And more here on the link between poverty, self-control and willpower. More posts in this blog series are here.

The Ethics of Human Rights (58): Economic Human Rights and Desert

First, a brief reminder: economic human rights are a subset of human rights dealing with poverty, standard of living, food, shelter, work, education, social security and health. They are set out and guaranteed in the International Covenant on Economic, Social and Cultural Rights, but also in other treaties and declarations, notably in the Universal Declaration.

Now, compare Article 11 of the Covenant to Article 25 of the Universal Declaration:

Article 11: The States Parties to the present Covenant recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions.

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.

Notice the last 4 words: “circumstances beyond his control”. It looks like the drafters of the Universal Declaration intended to refuse aid to the starving if the latter are responsible for their own predicament. The same for the unemployed demanding unemployment benefits, the sick demanding healthcare and the homeless demanding shelter when unemployment, sickness and homelessness are not beyond people’s control. The drafters of the Covenant, on the other hand, seemed to offer unconditional aid, both to those who need aid because of bad luck and to those who need it because of stupid mistakes or risky gambles.

The position set out in the Universal Declaration is, I guess, the most common one. We often hear discussions of the undeserving poor wallowing in a “culture of poverty“. And while it’s unfair to categorize all the poor in this way, it is fair with regard to some of the poor.

There are two conflicting moral intuitions at work here. On the one hand, people should get what they deserve, even if it is misfortune. If misfortune is the consequence of risky gambles, laziness or avoidable stupidity, then people should shoulder the consequences of their choices. They alone are responsible for their misfortune and don’t have a strong claim to assistance. That’s the moral or moralistic argument against assisting the undeserving poor, but there’s also an argument based on prudence: if we were to assist those people anyway, then we would create moral hazard and disincentives: people would start to take all sorts of risks, make silly gambles and be excessively lazy because they know that they’ll get bailed out when things start to go wrong.

On the other hand, it’s cruel to let people starve even if their starvation is clearly their own fault, and our moral intuitions tell us we should help them anyway. Furthermore, the difference between bad luck that happens to people and misfortune that people bring on themselves is seldom clear in the first place: attitudes such as laziness and excessive risk taking can be genetically predetermined or can be nurtured in certain disadvantaged environments. This lack of clarity results in the practical problem of identifying real desert as opposed to apparent desert: you’ll have to screen individuals’ entire lives, their nurturing as well as their genetic profiles, and that would be a horrendous infringement of liberty and privacy.

So the question for those of us in favor of economic rights is this: do we view them as conditional or unconditional? If we choose the latter, we offend some strongly held moral intuitions about desert. As a result, we may create moral hazard and encourage existing opposition to economic rights. In addition, we may also find ourselves in the unpleasant universe of absolute determinism: if desert is ruled out, then we’ll tend to assume that people’s actions are determined by nature or nurture.

If we choose the former, we will be excessively cruel in some cases, and a threat to liberty and privacy in most cases. (I say most cases and not all cases because some people are clearly undeserving and there’s no need to infringe their privacy and liberty in order to find out. Still, even those people may one day lose their label and hence their privacy with the advances of the science of genetics). We’ll also have some trouble insisting that economic rights are rights: human rights are typically unconditional – people don’t lose their right to free speech because they did something to deserve this loss.

It’s not an easy choice, and whatever we choose we’ll offend some moral intuitions. Of course, there’s no rule against offending moral intuitions, and the correct morality may offend all moral intuitions. However, in the absence of a correct morality, it’s prudent not to offend too many intuitions. A possible solution could be offered by a system of guaranteed basic income: everyone gets assistance, both those in need of assistance and those who are well off, both those who deserve assistance and those who don’t. Since this basic income is not really assistance, the problem about who deserves assistance doesn’t really arise. Of course, we would be giving something to lots of people who probably don’t deserve or need it, but at least there would be no one disadvantaged by this giving and hence no one will be complaining.

More about rights and desert here, and about rights and risk here.

Economic Human Rights (37): Basic Income as an Alternative to the Welfare State

The welfare state is the name for a collection of different government policies and programs designed to help the poor. Those policies and programs may include healthcare benefits, unemployment benefits, old age pensions, child benefits, some types of education subsidies, aid to the disabled, food stamps, housing subsidies, minimum wage rules, collective bargaining rights etc.

The welfare state is criticized in a number of ways. I’ll just mention a few arguments against it, without going into much detail and without replying to them:

• it creates dependency and destroys self-reliance, responsibility, effort and other virtues
• it rewards the undeserving and promotes subsidized idleness
• it violates property rights because the taxes necessary for funding welfare are a form of theft
• it imposes slavery on the productive and the responsible because it forces them to work for the benefit of the lazy and the irresponsible
• it destroys incentives for taxpayers to become productive
• it’s self-destructive because it destroys the prosperity that it wants to redistribute (the destruction of incentives results in the destruction of prosperity), or because it renders poverty more attractive
• it’s not sufficiently targeted to the most needy: wealthy families may get child benefits, and wealthy pensioners may get healthcare subsidies
• it requires a heavy state bureaucracy that usurps the right to invade the privacy of potential welfare beneficiaries (in order to ascertain whether people deserve benefits: are people really unemployed or unemployable? does their health status merit health benefits? etc.)
• it can be gamed and people may engage in welfare fraud.

Some of these criticisms are evidently more pertinent than others, but let’s not evaluate them one by one. If we assume that there’s some truth in some of them, then it may be worthwhile to look at some possible alternatives. People often propose non-state solutions such as private charity (enhanced and encouraged by way of tax policy, education etc.). An advantage of private charity is that it fosters solidarity, virtue and a sense of belonging. However, it’s also counter-cyclical in the sense that it’s least available when most necessary (e.g. during economic recessions). Moreover, it tends to be unreliable and unequal (it may not cover all the needs of all poor people all of the time).

Another possible alternative is to keep a system of state provision of welfare, but to radically alter the specifics of the system. For example, one could give people a guaranteed and unconditional basic income at a level high enough to cover basic needs. Every individual would receive the basic income whatever his or her predicament, current or future. It would be funded with tax revenues, and therefore wouldn’t be a reply to the theft and slavery criticisms of welfare, but those criticisms are weak anyway (because they imply that all state activity, including policing and infrastructure, are illegitimate). It would, however, be a strong reply to the privacy infringing aspects of the current welfare system. A basic income, since it’s unconditional, would not require intrusions into the private lives of citizens in order to ascertain whether they deserve a benefit or not. It would undo the complexity of many current programs and hence also remove the need for a large bureaucracy. And it would counter the charge of assisting the undeserving: although many undeserving would receive a basic income, few would complain about it since everyone would receive it. Welfare fraud also would obviously become impossible.

An added advantage of a basic income system of welfare would be that it allows people to take more risks. They know that they won’t be destitute if things don’t work out. More risk taking can be socially advantageous because it can result in more innovation, more productivity etc.

However, notwithstanding the set of advantages, a basic income system will probably not be a perfect substitute for existing programs. It’s questionable, for example, whether a basic income, even one that is set at the highest sustainable level, will be enough to cover certain catastrophic healthcare costs. In general, a basic income theory doesn’t take into consideration the fact that different people have different needs and abilities and therefore require different amounts of resources.

What is Equality? (2): Or, Equality of What?

As I mentioned before, when people talk about equality they mean equality of something very specific. The problem is, they hardly ever agree on the specifics. So it’s not uncommon to see two people talking about equality and actually talking about something completely different. And even when they’re talking about the same specific type of equality, they often disagree about its importance, its definition and its (lack of) merits.

Here’s a list of some of the types of equality that are frequently discussed:

1. equality of respect and/or dignity
2. equality of income or wealth (sometimes equality of consumption)
3. equality of a bundle of basic resources needed for a minimally decent human life
4. equality of capabilities
5. equality of power (political and other power)
6. equality of rights
7. equality of luck or opportunity, i.e. equality of natural and social endowments.

I’ll skip the first one for now (I may come back to it in a later post) because it’s vague in its policy implications, and it’s those implications I want to focus on here. In fact, what do we want to do when we say that we want to promote one of the remaining 6 types of equality? And what are the likely problems we’ll face? Let’s go over them one by one.

2. Equality of income or wealth (sometimes equality of consumption)

Few people actually want to strive towards complete equality of income, wealth or consumption, for several good reasons.

• First, people have different consumption needs and hence different income or wealth requirements. And I’m talking about needs, not preferences. People who prefer expensive stuff will have a hard time justifying the inequality of income or wealth that they require to satisfy their tastes. On the other hand, a blind person will have no difficulties making the case for a higher income. Preferences may also be problematic when they aim too low rather than too high. People who are born into deprivation and only see deprivation around them may adjust their preferences and expectations so that they are satisfied with their lives. However, it would be wrong to follow their preferences rather than their real needs.
• And secondly, equality of income or wealth creates an incentive problem. See here. If people are not rewarded for their efforts, they may decide that their efforts aren’t worth their while, and society as a whole may be worse off as a result.

So equality of income is in fact shorthand for reduced income inequality. As we don’t want this type of equality to collapse into the next one (see number 3 below), let’s assume that we’re not talking about a society in which income inequality means that the people at the wrong side of the inequality are poor – poor in the sense that they lack the basic resources needed for a minimally decent human life. So, instead picture a society in which all prosper but some prosper a lot more than others.

Is that kind of inequality a problem? Many say it isn’t. Why should a university professor care about how much a business tycoon earns? However, income inequality in this sense can be problematic. It can, for instance, shock people’s notions of fairness and justice. If the professor successfully teaches her students about morality, and the business tycoon earns his wealth by polluting the earth, it may seem unjust that the professor should be rewarded less. Merit and desert are powerful ideals, and a society that systematically violates these ideals through its system of rewards may not be the ideal place to live.

Even if the tycoon earns his wealth by way of morally sound activities, there can be a problem of justice: perhaps he started life in an advantaged position compared to the professor, and therefore doesn’t (entirely) earn his rewards. Maybe the professor also wanted to become a tycoon, but her blindness forced her into a different career. (See point 7 below). And even if the starting positions are equal, the result of the tycoon’s wealth may be that he, compared to the professor, has a larger influence on democratic politics. (See point 5 below). This may destroy democracy, or at least result in a highly fragmented and therefore also unstable society.

So we have some good reasons to do something about this type of inequality. However, when we try to reduce – not eliminate – income inequality, we’ll probably reach a point at which redistribution starts to discourage people from being productive (the incentive problem mentioned above). Or not. Perhaps the loss of income they suffer because of redistribution makes them want to be more productive. Higher productivity can be the means to compensate for the loss of income. It’s not clear how strong these two possible effects are.

In any case, many of the problems caused by income inequality don’t need to be solved by way of reductions in income inequality. Unequal political influence generated by unequal wealth can be solved by limiting the influence of wealth on politics, rather than by limiting wealth.

More on income inequality here.

3. Equality of a bundle of basic resources needed for a minimally decent human life

Let’s now drop the assumption that we’re talking about a society in which all prosper, albeit unequally. That’s unrealistic anyway. Even in the richest countries on earth, there are many people who are unable to secure the bundle of basic resources necessary for a decent human life. There’s a theory called sufficientarianism that wants to focus, not on income inequality or relative poverty, but on absolute destitution. It claims, correctly I think, that all have a right to an equal bundle of basic resources and that this is what equality means.

The easiest way to make sure that people possess these basic resources is to give them enough money to buy them. For example, there’s a political movement advocating a guaranteed basic income (an income people receive whether they work or not; Philippe van Parijs is a notable supporter of this policy). But also employment benefits, healthcare benefits etc. aim to provide people with access to the basic resources necessary for a decent life.

The advantage of giving people money is of course that money is fungible: people can use it the way they want. That means it takes into account the fact that different people need different and different amounts of basic goods (take again the case of a blind person). If you give people basic goods directly, rather than the money necessary to buy them, then it becomes difficult to tailor the given goods to the specific and variable needs of individuals. An all-purpose means such as money is clearly better.

However, you’ll still have the problem that some people may need more money than others because they have basic needs that are more expensive, again not because of differences in taste or preferences, but because of different abilities. A blind person does not only need different resources but also more resources in order to lead a minimally decent human life. So we’ll have to factor in capabilities (see point 4 below). Hence, equality of basic resources, outside of the capabilities approach, isn’t enough. If that’s your goal, you won’t do justice to everyone.

An additional difficulty is that the composition of the bundles has to be different from one country to another, and not just from one individual to another. A minimally decent life in one society is more costly than in another one. In a highly industrialized and technological society, it’s more expensive to earn a living than in a society where, in a manner of speaking, you can just pick the fruit from the threes. If you add up all these differences in the content and quantity of the bundles you risk ending up with something very arbitrary. The whole concept of a basic bundle may lose its meaning.

Even if we assume that this type of equality does retain some meaning as a separate type of equality, we’re faced with the same incentive problem as in income equality, depending on how costly the bundle of resources is and how heavily we have to tax to produce it.

A final problem with this type of equality is one of fairness. The guaranteed basic income approach, as well as all other forms of unconditional provision of basic resources, seems to reward the lazy and punish the hard working. It’s reasonable to provide basic resources to people who are poor because of bad luck, lack of talents, bad health etc., but not to those who voluntarily choose not to be productive.

4. Equality of capabilities

So let’s turn to this next type of equality, which can be seen as a fine-tuning of the previous type. Why do we say that people need a bundle of basic goods for a minimally decent life? Because a minimally decent life means something. It means having the capabilities to engage in certain functionings that are part of a minimally decent life. These functionings include “beings and doings” (in the words of Amartya Sen), such as being nourished and in good health, taking part in community life, culture and thinking etc. People’s capabilities to achieve these functionings should be equalized. That doesn’t necessarily require a fixed and equal basic income. On the contrary, because a fixed basic income does not take into account the different levels of incapability across individuals. Some people need no help whatsoever. Others may need a lot. The blind person mentioned a few times already may need more than the average poor person, but perhaps less than a particular person who’s very deep in poverty.

The problem with this type of equality is the precise determination of the list of functionings and capabilities that really matter and that should be equalized. There’s a risk of paternalism, a lack of neutrality and a sectarian bias. Maybe a democratic approach to this determination can solve that problem. And that’s the link to the next type of equality.

5. Equality of power (political and other power).

In a democracy, people have – formally at least – equal political freedom. They all have the right to vote, to voice criticism or support, to campaign and demonstrate, to assemble and associate, and to stand for office. However, a lack in some of the other types of equality mentioned above may reduce the fair value and effectiveness of this democratic equality for a certain number of citizens, e.g. the poor, the blind, etc. As already argued, even prosperous citizens can have unequal power in a society with large income discrepancies (remember the professor and the tycoon).

So, if we want to promote this kind of equality of power, we first need to promote other types of equality. People may need access to basic resources in order to have the time and energy to devote to politics. And some of these resources are directly necessary for political participation (people have to drive to the polling station, read the newspapers etc.). However, equality of power can also be promoted without first promoting other types of equality. We can regulate campaign financing and access to the media and thereby limit the influence of wealth on politics. We don’t necessarily need to reduce wealth inequality to do that (although there may be other reasons to limit wealth inequality, see above). Equality of power, therefore, doesn’t necessarily collapse into other types of equality. It’s a concept that merits a separate existence.

Equality of power isn’t just equality of political power. Slaveholders have power over their slaves, husbands may have (had) power over their wives etc. Again, equality of power in these contexts can be promoted by first promoting other types of equality. If slaves and women are given basic resources then we reduce the cost of exiting the oppressive relationship as well as the power of the counter-party to keep them in that relationship. We may also want to given them equal rights.

However, I see that this post is dragging along and is now way past the saturation level, I guess. So I’ll stop here and just link to some previous posts dealing with the two remaining types of equality:

6. Equality of rights: here
7. Equality of luck or opportunity, i.e. equality of natural and social endowments: here

The Compatibility of Freedom and Equality (12): How Coercion Promotes Freedom

Freedom understood as independence and the absence of interference or intentional coercion (especially government coercion) is an important concept. The problem is that it seems to invalidate redistribution through taxation. If the government taxes a wealthy person to transfer some of her wealth to another person living under a fixed threshold of basic resources, then the government intentionally coerces the wealthy person and takes away (part of) her freedom. That’s one of the origins of the traditional view that freedom and equality are incompatible. For people who believe strongly in freedom as the absence of intentional coercion, it’s very difficult if not impossible to accept taxation and redistribution.

On the other hand, there are those who want to maintain the use of government and taxation as a means to guarantee people an equal share of those basic resource necessary for a decent human life. And I’m one of them. How can we reply to those – let’s call them libertarians – who voice concerns about the loss of freedom that’s inherent in redistribution?

1. First, we could argue that freedom, as it is understood here, isn’t the only important value, and that we should put it “in the mix” of the whole of human values, including welfare and equality, and try to balance those values in a fair way. That’s the value pluralism approach, but it’s an approach that won’t be successful to those who don’t believe in value pluralism or who believe that if there are many values, freedom is still the most important one (e.g. many libertarians).

2. Another reply could be that redistribution reduces one type of freedom – freedom from intentional coercion – in order to promote another type of freedom, namely a more positive type of freedom in which not only the absence of coercion is important but also the availability of choices, capabilities and power. Of course, a wealthy person’s choices, capabilities and power aren’t enhanced by the fact that she pays taxes – on the contrary – but when these taxes are used to guarantee a poor person’s basic income for example (or education, or health etc.) then that poor person will have a wider array of choices, capabilities, opportunities, power etc. So positive freedom is redistributed by means of a limitation on negative freedom, and is redistributed in such a way that on average people have more equal access to it. (If a rich person pays $10,000 in taxes for the welfare benefits, healthcare, education etc. of a poor person, then the rich person loses less choices, opportunities and capabilities then those gained by the poor person. Of course, the exact tax rate is important: punitive tax rates may harm the rich more than they benefit the poor).

In a way, this second reply also involves an appeal to value pluralism: negative freedom (one value) is balanced against more equal access to positive freedom (another value), and is – sometimes and in part – outweighed by it.

3. A third reply isn’t based on value pluralism. We could argue that redistribution of income or wealth through government taxation merely limits one person’s negative freedom for the sake of another person’s negative freedom. It’s fairly easy, in fact, to argue that poverty, or the absence of those basic resources necessary for a decent human life, reduces the negative freedom of the poor. The poor are intentionally coerced all the time, for no other reason than their poverty: the homeless are forcibly removed from train stations, gypsies from land where they aren’t allowed to camp, poor migrant workers have their passports taken away by their employers and are forced to repay “travel costs” by working for free, etc.

If the government gave these people a basic income for example, or rent subsidies, they wouldn’t be coerced in these ways. The taxes that the government would collect for this purpose would not simply reduce negative freedom for the sake of another value (positive freedom, welfare, equality etc.). It would reduce the negative freedom of some for the sake of the negative freedom of others (possibly many others depending on the type of taxation system). In other words, it would modify and equalize the distribution of negative freedom. It would increase intentional coercion on some people in order to reduce intentional coercion on (many) others.

Taxation and redistribution do indeed reduce freedom (in one sense of the word) but at the same time they increase freedom (freedom in the same sense as well as in a more positive sense). Conversely, a failure to tax and redistribute could reduce freedom.

More posts in this series are here.