The Ethics and Economics of the Basic Income Guarantee, by Karl Widerquist, Michael Anthony Lewis and Steven Pressman

Ashgate, Aldershot, 2005, xvi+334pp, hbk, 0 7546 4188 0, £60 Order this book

The essays in this collection were first given as papers at the first congress of the United States Basic Income Guarantee (USBIG) network.

In his foreword Guy Standing distinguishes between those who see a Basic Income (BI) as facilitating an efficient market economy, ‘allowing for greater labour market flexibility and making for a society of greater individualism and economic rationality’ (pp.xiii-xiv) and those who believe that a BI ‘must be part of an egalitarian strategy, not to be seen in isolation’ (p.xiv).

But the Basic Income of the Foreword is only one possible example of the Basic Income Guarantee (BIG) which the book and USBIG are about, as a BIG is defined as ‘a public policy that unconditionally ensures that the income of every citizen reaches some minimum level. Its guarantee is unconditional in the sense that every citizen receives it without any obligation to work, to have children, to get married, or to perform any socially mandated task’ (p.1). The problem with this definition is that both a Citizen’s Income and the UK’s means-tested Pension Credit and Income Support can fit into it and that ‘basic income guarantee’ can either mean that an unconditional equal income is paid to all citizens or that the State ensures that no-one’s income falls below a certain level. These are very different ideas. When the editors list the possibilities they have in mind (negative income tax (NIT), BI and Basic Capital (BC)) they omit the means-tested options, suggesting that the definition on p.1 should read ‘a public policy which by some means or other pays to every citizen an income the amount of which is not affected by the citizen’s other income’ (a definition which with a small stretch of its literal meaning can include NIT by counting an income tax allowance as a cash payment).

If the reader keeps in the mind the terminological difficulties then the papers collected here will be of great interest.

Chapters 2 to 5 relate some important history.

Chapter 2 revisits the Speenhamland experiment of 1795, finds that ‘while it is theoretically possible that a floor under incomes would be transformed into a ceiling, this certainly did not happen during the Speenhamland period, and there is little evidence that it has ever happened’ (p.43), and concludes that ‘if an income guarantee were in place, employers would become even more cautious about imposing wage cuts’ (p.43) – but only, of course, if such an income guarantee were non-means-tested. Chapter 3 discusses the idea of a capital endowment paid for by inheritance tax; and chapter 4 the recent history of American income maintenance policy: the New Deal, food stamps (means-tested), the Earned Income Tax Credit (EITC) and workfare. Chapter 5 returns to US NIT experiments, in which work disincentive effects were found to be interestingly small (though the press at the time treated the existence of any such effect as serious) and in which the major effect was found to be higher divorce rates – which is what brought the experiments to an end.

Part II is entitled ‘Debate’, and here some significant ideas are discussed: ‘citizenship’ in chapter 6, ‘liberal neutrality, socialism and work’ in chapter 7, ‘exploitation’ in chapter 8 (i.e. a BI recipient’s ability to exploit others’ work effort – Widerquist finds the case unproven), and ‘freedom’ in chapter 9.

The third part of the book seeks ‘evidence’ for an equity-efficiency trade-off (the trade-off is small), for whether the EITC has made a BI unnecessary (though the conclusions are about lack of evidence for a link between short- and long-run employment incentive problems), and for the risks of cumulating income sources (a ‘universal social wage’ would be better).
The final section contains descriptions of particular proposals for a BI in South Africa, Brazil (where Senator Eduardo Suplicy prefers a BI to other proposals), Belgium and Holland (back-door strategies), Canada (means-tested) and the UK (Negative Income Tax: feasible).

While the quality of the papers is uneven (it always is at conferences) and they are very different from each other in style, length, depth of analysis, scientific rigour and terminology (see above), a cumulative case emerges for a non-means-tested BIG, preferably a BI, with NIT as a close runner-up and BC as an interesting outsider.
For anyone researching a Citizen’s Income this book is essential reading; and for anyone interested in the subject there will be chapters which will be of interest.

We look forward to further collections from the USBI(G) network.