Supporting a Livable Income Guarantee

Some responses I gave to a student journalist asking about universal basic income.

There are two main approaches to implementing a universal basic income.

One is to introduce a universal payment to everyone in the community, funded by taxation, and gradually increase this to a “livable income”, that is, one sufficient for people to meet their basic needs on a sustainable basis.

The second is to focus on those who currently don’t receive a basic income and provide it to them. This can be done by first increasing existing benefits, such as NewStart to a livable level and then expanding access to those benefits by removing punitive work tests. This would lead to a “participation income”, where everyone who contributed to society through paid work, volunteering, study or child-rearing received a livable income. I favour the second approach, for reasons set out here.
https://johnquiggin.com/2017/02/08/why-we-should-put-basic-before-universal-in-the-pursuit-of-income-equality/

The government’s response to the pandemic has moved us much closer to a livable income guarantee, at least temporarily.  The JobSeeker allowance is twice the amount of NewStart, and compliance testing such as the requirement to make 20 job applications per month has been dropped (at least officially – some case managers haven’t got the message on this). And JobKeeper implies a willingness to intervene to prevent involuntary mass unemployment.

Since this is very much at odds with the government’s policy position before the pandemic, it is unsurprising that they are seeking to ’snap back’ once the immediate crisis is over. But this neither feasible (because the economy will take a long time to recover) nor desirable (because of the benefits of a livable income guarantee).

6 thoughts on “Supporting a Livable Income Guarantee

  1. Professor Quiggin, your “participation income” proposal looks rather like a job guarantee (not exactly like the schemes proposed by Bill Mitchell and others, but conceptually quite similar). Are you proposing this particular formulation because you think it’s superior to the more formal JG schemes, or because you think it’s more politically palatable – something that has a chance of actually being implemented, rather than something which is politically impractical?

  2. Curt, your comments are getting very incoherent. If you are under stress as a result of the pandemic, I hope you can get access to help managing it. For the moment, please comment only in the sandpit.

  3. I support this proposal for a universal lovable income. For me, universality is key, even if there is a participation condition.

    But I also agree we ought to prioritise the well-being of those in or close to poverty.

    Sorry, I have nothing useful to say other than to express my support.

  4. As indicated on an earlier thread, I also support the idea of a livable participation income. It does address the excessive income concentration at least a little bit, including unemployment or under employment and it recognises important work done outside ‘the market’. Furthermore, I would expect it would assist in counteracting wage theft and workplace safety problems by removing the threat of extreme poverty from people who dare not speak up. As such it would provide an effective lower bound on wages. I am not a psychologist. However, my reading of their reports, I understand economic survival threat is a major contributor to mental health issues. In some instances, it could assist first home buyers because in the case of couples there is a lower bound on income, which lenders can take as certain. Finally, it would provide a low but stable basis for consumption expenditure.

    JQ. I am sure I am not saying anything new here. I also admit I haven’t read the link on this thread. The above is merely spelling out what came to my mind when I read your first thread on this topic.

  5. JQ, I suggest you send Darrick Hamilton a copy of Economics in Two Lessons asap. Imagine the next headline. I’ll pay if necessary.

    “Don’t Blame Econ 101 for the Plight of Essential Workers

    They’ve been systematically devalued for years. But they don’t have to be.

    Still, this fact does not in and of itself consign essential jobs to being bad jobs, labor experts stressed. No fundamental principle of economics requires burger flippers to make $7.25 an hour. “The Econ 101 argument is that workers are paid on the marginal productivity of their labor,” Darrick Hamilton, an economist and the executive director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University, said. But that is too simplistic.”

    https://www.theatlantic.com/ideas/archive/2020/05/why-are-americas-most-essential-workers-so-poorly-treated/611575/

    https://en.wikipedia.org/wiki/Darrick_Hamilton

    Kien, this may be a typo, yet it deserves to stay; “universal lovable income”. Great.

  6. “Results of Finland’s basic income experiment: small employment effects, better perceived economic security and mental wellbeing

    “The basic income recipients were more satisfied with their lives and experienced less mental strain than the control group. They also had a more positive perception of their economic welfare. The interpretation of the employment effects of the experiment is complicated by the introduction of the activation model in 2018.
    A two-year basic income experiment was carried out in Finland in 2017-2018. The evaluation study is now available. The register data on employment now cover both years of the experiment and a more thorough analysis has been made of the results of the survey. In addition, the interview-based survey of basic income recipients complements the overall picture. ”

    https://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/results-of-the-basic-income-experiment-small-employment-effects-better-perceived-economic-security-and-mental-wellbeing

    All these experiments are great. Yet imo only a 2+ generation ubi will expise and solve all doubts. Example: gaming rights and native americans. First generation has pressure off but little change in weallth as they provide for next generation making outcomes really about the third generation.

    Now if you can just sneak this 60yr trial past neocons….

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