- - Monday, June 13, 2016

ANALYSIS/OPINION:

A minimum income for everyone above a certain age, often called a basic income, is back in vogue. Several major magazines and prominent thinkers from different philosophical backgrounds say a basic income is necessary in an age where robots will replace all jobs. Others call for a basic income to replace the current welfare system.

The idea of a minimum income isn’t new. Even the term “minimum income” is found somewhat regularly in publications dating to the late 19th century. The terms “basic income” and “universal basic income” are only the more recent branding of this old idea.

The politics of a minimum income (universal or means-tested) also isn’t new. Towards the end of 18th century and into the early 19th century, wheat prices fell, which hit rural areas in Britain particularly hard. The country was also entering a particularly turbulent period of the Industrial Revolution and undergoing unprecedented changes. The nature of work was drastically changing, economic growth wasn’t equally distributed, and real wages for many workers wouldn’t begin rising until later in the century.

It was during this time that a number of parishes (local governments) adopted a means-tested minimum income under the old Poor Laws system. It came under fire by utilitarians in the Royal Commissioners Report on the Poor Laws in 1834 for increasing the population, poverty and spending, as well as reducing the incentive to work among the poor.

The minimum income was later attacked by Karl Marx and Friedrich Engels for supplementing rural wages while increasing the profits of farmers (who formed the English aristocracy). Even Tocqueville wrote that the old Poor Laws created sense of entitlement with disastrous consequences: “The number of illegitimate children and criminals grows rapidly and continuously, the indigent population is limitless, the spirit of foresight and saving becomes more and more alien to the poor.”

More than a century later, a minimum income took on new life, in a slightly different form. In the 1960s, the economist Milton Friedman proposed a minimum income that was financed through a progressive income tax system. The idea experienced criticism for nearly identical reasons to the minimum income under the old Poor Laws. However, a version of Friedman’s idea was adopted as the Earned Income Tax Credit a little more than a decade later, which is still a component of the U.S. tax code.

Worrying about “technological unemployment” is also not new, even though the term initially came into use around World War I and peaked in popularity during the Great Depression. The Luddites famously led violent protests of machinery that replaced jobs in British mills during the early 19th century, or the same period during which a minimum income of the old Poor Laws was being hotly debated.

Today, many who are worried about the future of work and technological unemployment suggest that “this time it’s different.” The computational powers of “deep learning” neural networks will soon create robots that will replace the human role in every current job currently present. And that may be true. However, though it is extremely difficult to predict the future nature of work, we can bet on the future of technology complimenting human talents in new and exciting ways.

Similar to the past, those arguing the pros and cons of a minimum income would be better off changing focus altogether. Rather than debating competing systems to alleviate poverty, public policy should be focused on integrating the poor into an expanding overall economy to end real poverty altogether. Public policy should focus on eliminating licensing restrictions, improving access to capital, as well as tax and regulatory reform that allows creative people with good ideas to compete without having to employee an entire team of tax accounts and lawyers.

These reforms should be bipartisan and are the real secret to reducing poverty and improving opportunity — something that both a minimum income and the current welfare state have no shot at achieving.

Paul Winfree is the director of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.


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