This is the second part of Professor Guy Standing’s talk at the “Of Money and Men” conference in Prague on 12th May. In this part he focuses on basic income. You can read the first part of the talk here.
“I’ve been working and lobbying for basic income since 1985. And we set up in 1986, a group of economists, philosophers – many have gone on to fame and glory, if not richness – an organisation we called BIEN. I came up with the name because it’s French and it’s nice; Basic Income European Network. But when hundreds and thousands of people started to join from around the world, we decided to change the name at our Barcelona congress in 2004. And we became BIEN, but the “E” became “Earth”. And since then, for various reasons, basic income has suddenly become mainstream. Basic income is seen by mainstream economists of high reputation now. Those same economists, 10, 15 years ago, would have written, saying it was a stupid idea. Today they understand that if we do not address the major crisis of inequality and insecurity – they go together but they’re different – we are at risk of going to a dystopia of neo-fascist authoritarianism. It’s no light-hearted matter.
And also there are philosophical reasons. I’ve just come from speaking at a big conference in Zurich because, as you may know, on June 5th there’s going to be a national referendum on whether a basic income should be introduced as a constitutional amendment in Switzerland; commit the Swiss government to move towards a basic income. What was interesting about a number of other speakers who were there; they included two plutocrats from Silicon Valley, a former US secretary of labour, a venture capitalist from New York and sundry other prominent economists and philosophers. I don’t think we’ll win the referendum, but it’s now up there in the mainstream.
And, I want to emphasise several points. First, the standard argument against basic income is that it’s unaffordable. Yet, every country spends six or seven percent on subsidies, which distort markets, which go predominantly to the corporations and to affluent groups. A basic income would cost much less than that.
Second, we spend a huge amount – we, governments – on means-tested, behaviour tested, costly welfare systems that act as a deterrent to labour. Because if you have means-testing you have poverty traps. So in those countries, I’ve just come from Denmark, there the calculations are that the poverty trap is, you have a marginal tax rate, if you go from low benefits into the sort of low-wage jobs that that the precariat can get, of 86%! That means you only get an extra 14% by going into a low-wage job of the type that’s available. In Germany it’s 85%. In Britain it’s a wonderful 80%. Can you imagine what would happen if the salariat had marginal tax rates of 80% or more? They would be – PAH! – creating havoc! Creating wonderful speeches. But the precariat has to face them. We need to overcome the poverty trap. The only way to do that is to move to a basic income as a floor.
But I want to advocate the basic income for a philosophical reason. It’s a matter of social justice. All the aspects that are instrumental, they’re important, but Thomas Paine and a very fine thinker in the early 20th century, G.D.H. Cole, put their finger on it. The way I put it is this; the wealth and income of any of us is far more to do with the efforts and achievements of our ancestors than anything you or I do ourselves. But we don’t know whose ancestors created our wealth; yours? Mine? His? So, in a sense you can see a basic income as a modest amount given to everybody as a right, as being a social dividend paid from the collective wealth.
I came to this idea when I was asked to talk in Middlesbrough, an industrial town in the north east of England, and I mention it in my book. Middlesbrough was a village in the 1820s. Then they discovered iron. And within 15 years Middlesbrough became the centre of the industrial revolution, the centre of industrial capitalism. So if you go to San Francisco, the Golden Gate Bridge was built with iron ore from Middlesbrough. If you go to Sydney Harbour, the bridge was built with iron from Middlesbrough. Today if you do to Middlesbrough you see poverty; you the precariat; you see people hanging around in the streets – no future. But you see the toffs down in the south of England who got the wealth produced by Middlesbrough. And they’re back in government; they went to Eton and Oxford, and so on. And you say that is fundamentally unfair. The wealth was created by the ancestors of those people. So for me that is the main justification.
But a basic income would also give security to people. It would also enable people to have a greater sense of control of their time. To be able to make choices about work, reproductive work. I want to spend more time caring for my elderly mother and not just doing a job pouring the tea for a boss. Are you telling me that pouring tea for a boss is more valuable than doing the caring?
It also gives us a sense of encouraging work and encouraging leisure. The only condition, which I think could be justifiable for giving, attaching to a basic income is a moral one. I say that, in fact, to encourage democracy, which is very weak at the moment, we should do what Pericles did in 450 BC, which is, he said, for participating in the life of the polis, as citizens, I – the state – will give you a basic income. He did that. He didn’t make it conditional; he gave it as a reward. And I say that anybody when they start receiving their basic income should sign a statement morally committing to voting in elections and to going to one political meeting a year.
I want to end by just mentioning this is the year of the pilots, the experiments. Some years ago I was involved in the first basic income pilots in Africa, designing it, carrying it out. Saw fantastic results. And then I got an opportunity to do three pilots, experiments, in India. When we were designing it and raising the money to do it, Sonia Gandhi let us know that she thought we were wasting a lot of money and that everybody would be lazy and drink alcohol and smoke cigarettes. I thought we were going to be blocked from doing it. But we did it. We provided over 6000 people in nine communities with a guaranteed basic income. Every man, every woman, every child; the child’s paid through the mother. For 18 months and then four more, they each had that basic income. No conditions; they could do what they liked. And we monitored it through what everybody calls a randomised control trial, comparing it with other communities where nobody got a basic income. And the results, which we published in a book, – I’ve got a few copies if anybody is interested – were remarkable. Sonia Gandhi asked us back to her house. Two cabinet ministers came out in favour once they saw the results.
First, the welfare effects. People who have a basic income improve their nutrition, particularly the children, improve their health, improve their schooling, school performance, sanitation.
Second, contrary to what people say, people worked more. And laboured more; but more work.
Income in those communities, discounting the basic income, went up. And the income inequality went down, and there was greater economic dynamism.
The third aspect was that equity improved, because people, like the disabled, this woman who we pictured and is on the front of the cover, she’s disabled, she has no legs. But people like her, when they had their basic income and her family and friends contributed part of their basic income, she was able to buy the means of production and become a seamstress, making the clothes in her village.
But the thing that really excited me, and we emphasised it, – and if anyone’s interested, I’ve written some articles on this – is the finding that the emancipatory value of the basic income is greater than the money value. Because people who have that basic income have security and they can make choices and decisions. So people managed to save and get out of bonded labour. People managed to find ways of cooperating with their neighbours and building their community.
But I’ll end with a story. I went to one village where we were doing a basic income, and when we started it we had to get everybody with a card, because they had to have their picture card so we knew who to give the basic income to until they had bank accounts. And in one village all the young women wore veils. And they didn’t want their picture taken. We said “alright, then go into a hut” and have their picture taken unseen.
When I went back to that village about six, seven months afterwards when the program had been going, I said to an Indian colleague of mine, working on the project, I said “have you noticed the change in this village?” He said “no”. “Yeah, yeah, yeah, when we came here all the women were wearing veils and now none of them are”. He said “yes”. So we called the young women, some of the young women across, and they wouldn’t, you know, young women, don’t like talking to strangers. But eventually one of them said “I’ll tell you why. Before, we had to do what the elders told us to do. Now we have a little of our own money we can make decisions ourselves.” Thank you very much.”