December 17, 2016

Guaranteed minimum income once had bipartisan support

Corporate Knights - There was a brief moment in time when both the Republican and Democratic nominees for the U.S. presidency supported a guaranteed minimum income.

Economists and politicians from across the political spectrum had begun to warm to the idea in the 1960s as a poverty reduction measure – from Nobel laureate and free-market evangelist Milton Friedman to left-leaning economists like John Kenneth Galbraith. A petition in the spring of 1968 calling for its adoption was signed by over 1,000 economists, bolstering similar conclusions from multiple presidential and state commissions.

A Nixon-backed bill to adopt a modest form of GMI passed the House of Representatives by a wide margin in 1970 and 1971, and looked poised to sail through the Democratic-controlled Senate.

In Canada, similar momentum appeared to be building. The Special Senate Committee on Poverty concluded in 1971 that a GMI would be the most effective tool for lifting people out of poverty, as did the Castonguay-Nepveu Commission of Quebec. Even Robert Stanfield, leader of the official opposition Progressive Conservative Party, was supportive of the concept.

...GMIs are appealing for reasons that span the political spectrum. At various times the notion has been referred to as a universal basic income, basic income guarantee or negative income tax, but has always maintained one core element: that every member of society receives unconditional cash transfers that guarantee them a minimum income.

This differs significantly from the current methods of establishing a social safety net, one that is conditional. Work requirements for welfare recipients are the most prominent example of this, while old age pension plans are age-restrictive. Other aspects of the social safety net involve the government providing specific services like health care.

But poverty, at its most basic level, is about a lack of money. It makes intuitive sense to solve this by simply giving poor people more of it.

Friedman made the conservative case for a GMI in his book Capitalism and Freedom, published in 1962. It centred on three points: it would supplant a bloated and inefficient welfare system, transfer spending decisions away from the government into the hands of private citizens and allow people to get out of poverty gradually by not cutting off their benefits when they began to earn more money – escaping the “welfare trap.”

For people on the political left, it offered a simple approach to an intractable problem. “I am now convinced that … the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income,” Martin Luther King wrote in 1967. The egalitarian promise of equal treatment was also salient as second-wave feminism and the civil rights era dominated the political landscape.

This brief moment of opportunity quickly disintegrated. The Nixon bill died in the Senate due to a mix of senators that either found it too weak or too extreme. Nixon’s Democratic opponent in the 1972 race, George McGovern, adopted a stronger GMI into his platform but lost badly. The Watergate scandal soon engulfed all legislative action and put the issue on the backburner.

Four pilot projects launched by the Nixon administration were carried out throughout the 1970s, but by then political support had largely dissipated.

In Canada, the federal government under Pierre Trudeau joined with Manitoba in 1974 to undertake what would become the most extensive study of GMIs conducted to this day called Mincome. But a change of government at the provincial and federal levels meant the project was mothballed in 1979 without much analysis.


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