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Idea of paying citizens a yearly stipend is gaining support in Switzerland

April 7, 2014 at 6:25 PM EDT
In Switzerland, an idea to guarantee every citizen a yearly income of 30,000 Swiss francs, regardless of other wealth or employment, has gained enough supporters to trigger a referendum. Economics correspondent Paul Solman reports that the idea is gaining some traction across party lines in the United States, too, but views differ on if and how a guaranteed basic income would work.
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JUDY WOODRUFF: Republicans and Democrats are likely to spend much of this midterm election year debating the virtues of the federal government, particularly when it comes to addressing income inequality. But it turns out that one big idea for changing how the government provides financial assistance may have appeal to some on the left and the right.

It’s a minimum level of government payments known as guaranteed basic income. And while it’s not exactly in the mainstream yet, the idea is gaining traction, as our economics correspondent, Paul Solman, found out, part of his ongoing reporting Making Sense of financial news.

PAUL SOLMAN: In Switzerland last fall, activists dumped eight million coins outside Parliament, one for each Swiss citizen. Their cause? A guarantee that every citizen get a yearly income of 30,000 Swiss francs, about $34,000, whether they work or not.

Movement leader Enno Schmidt:

ENNO SCHMIDT, Movement Leader: It’s a civil right that your existence is not negotiable by the market.

PAUL SOLMAN: So this is for everybody?

ENNO SCHMIDT: It’s for everybody, rich people, poor people.

PAUL SOLMAN: Schmidt and friends gathered 126,000 signatures, more than enough to trigger a referendum, which, if adopted, would become part of the Swiss constitution. Radical, you say?

Well, it turns out the idea has supporters here in the United States as well, both left and right. It was a long-ago favorite of conservative guru Milton Friedman and remains appealing to libertarian Charles Murray, who proposed a minimum income in a book called “In Our Hands,” say, $12,000 per person per year in today’s dollars, tax-free up to a total of about $30,000.

CHARLES MURRAY, American Enterprise Institute: You have a system whereby, every month, a check goes into an electronic bank account for everybody over the age of 21 that they can use as they see fit. They can get together with other people and then combine their resources. But they live their own lives. We put their lives back in their hands.

PAUL SOLMAN: And, enthuses Veronique de Rugy of George Mason University’s conservative Mercatus Center, we get their lives out of the hands of government bureaucrats.

VERONIQUE DE RUGY, Mercatus Center, George Mason University: The current system is not serving poor people well. The appeal of the guaranteed minimum income is, it doesn’t dictate that people who get this money how to spend it, and it assumes that they, better than anyone else in Washington, know what they need.

PAUL SOLMAN: On the left, anthropologist and activist David Graeber, a key cog in the Occupy movement, is similarly disenchanted with social welfare bureaucrats.

DAVID GRAEBER, London School of Economics: I think this is a perfect left critique of bureaucracy. We employ thousands of people to make us feel bad about ourselves. Just get rid of those people. Why not just give everybody some money, and I think everyone will be much better off.

PAUL SOLMAN: Now, to be clear, folks on the right believe a guaranteed minimum income only works if it wholly replaces current poverty programs.

CHARLES MURRAY: There’s no more food stamps. There’s no more Medicaid. There’s no — you just go down the whole list. None of that’s left. We’re going to go to a system whereby that bureaucracy downtown is cutting a check, but the human needs in the community have to be dealt with, those who are in the best position to do it, who are not bureaucrats, but people who know the person that experiences those human needs.

PAUL SOLMAN: Surprisingly, perhaps, the left’s Graeber points to evidence in support of the right’s Murray.

DAVID GRAEBER: In Namibia, they did an experiment where they used to give aid, and instead they just gave everybody a flat sum of money, and the first thing people did was, they got together, took half the money, put it in a common pool, and that created a democratic system.

And they decided what they really needed was a post office, I think, which is something no aid group would ever have thought of. These people actually do know their communal needs better than somebody from outside. So it would at least give us the opportunity to get together and create common projects, in a way that we haven’t been able to do before.

PAUL SOLMAN: But while David Graeber disdains government bureaucracies, he’s against wiping out all welfare programs.

DAVID GRAEBER: The amounts of money that they’re now talking about giving people aren’t enough to take care of things like health care, housing. But I think, if you guarantee those sort of basic needs, you could get rid of almost all the programs on top of that.

PAUL SOLMAN: Right-wing economist Deirdre McCloskey, who calls herself a bleeding-heart libertarian, has also supported a guaranteed minimum income for years.

But would you accept a minimum income with some of the social welfare programs continuing to be in place?

DEIRDRE MCCLOSKEY, University of Illinois at Chicago: Yes, because I think the other ones then would atrophy. I think they would go away.

PAUL SOLMAN: McCloskey is famous for her work, as Don McCloskey, on the rhetoric and history of economics. She wrote several critiques of the discipline from a feminist perspective after she herself changed genders.

PAUL SOLMAN: You went through a major life transformation almost 20 years ago.

DEIRDRE MCCLOSKEY: I did.

PAUL SOLMAN: Has it changed your point of view with regard to any of this?

DEIRDRE MCCLOSKEY: Well, I sometimes say that I’m a motherly libertarian, and that wouldn’t work too well if I was still a guy.

PAUL SOLMAN: Now, we shouldn’t forget a last key argument from the left: a minimum income as a way to combat rising income inequality.

That’s an issue even in relatively equal Switzerland, says the Harvard Business School’s Felix Oberholzer-Gee, a Swiss native who can vote in the upcoming referendum.

FELIX OBERHOLZER-GEE, Harvard Business School: Europeans are not used to the kinds of inequalities that the modern global economy tends to produce. They respond more harshly against even small changes in trends, because you grow up in a society where everybody is more equal than we will be used to in the American context.

PAUL SOLMAN: OK, there’s sympathy in Switzerland for a guaranteed income, and in the U.S. from both the right and the left. So, what’s not to like?

Well, for one thing, says liberal economist Barbara Bergmann, at any plausible minimum income:

BARBARA BERGMANN, Professor Emerita, American University: You’re still going to have a lot of people who are in trouble because they have special needs.

PAUL SOLMAN: Yes, says conservative blogger Megan McArdle; handouts instead of programs may be OK, but the same for everyone?

MEGAN MCARDLE, Columnist, Bloomberg View: I’m not sure that I would support, say, taking someone who is severely disabled and telling them, well, here’s $10,000 a year, just like that healthy 20-year-old down the street, and you get the same as he does.

PAUL SOLMAN: Bergmann would prefer we beef up current welfare programs that target specific needs.

BARBARA BERGMANN: If you give out fairly decent sums to people, some of them are going to misspend. The Swedes have worked this out very well. And people don’t feel a need there, because the needs, the most important needs are taken care of directly.

PAUL SOLMAN: More generally, points out conservative McArdle, sending checks to every American would cost trillions. But most problematic of all, perhaps, a guaranteed income, she says, would discourage effort.

MEGAN MCARDLE: Having half of the population, or any significant fraction of the population say that my job is just to take, and other people go out and make that money, I think that is morally problematic. If you can live without working, some people will choose to.

PAUL SOLMAN: To the left’s David Graeber, however, this is nonsense.

DAVID GRAEBER: We have this idea that people are just lazy, and if they’re given, you know, a certain amount of minimal income, they just won’t do anything. Well, probably, there’s a few people like that, but the vast majority, it will free them to do the kind of work that they think is meaningful.

I always talk about prisons. It’s a great example. You know, you have people who are fed, they’re clothed, they have got shelter. They could just sit around all day, but actually they use work as a way of rewarding them. You know, if you don’t behave yourself, we won’t let you work in the prison laundry.

I mean, people want to work. Nobody just wants to sit around. It’s boring.

PAUL SOLMAN: In fact, a guaranteed income could drive up wages for those at the bottom.

Harvard Business School’s Oberholzer-Gee.

FELIX OBERHOLZER-GEE: The people who now find it very difficult to get the spoils from a market economy will be in a much better negotiation position, because they can walk away. They can walk away without thinking, what am I going to eat tonight?

PAUL SOLMAN: What’s going to happen in Switzerland? Is some version of a minimum income going to be adopted, do you think?

FELIX OBERHOLZER-GEE: I will be very surprised if that was the case. But the debate is what really matters.

PAUL SOLMAN: And that’s just how the idea’s Swiss champion, Enno Schmidt, feels.

ENNO SCHMIDT: One hundred twenty-six thousand people say, yes, we want to discuss, and this is the initiative. They don’t say, yes, we are for an unconditional basic income, but that’s an interesting idea. Let’s discuss it.

PAUL SOLMAN: A discussion only just getting started in the Alps and closer to home.

JUDY WOODRUFF: You can learn more about the guaranteed basic income, a variation on that idea, and why the concept is catching on in Switzerland on our Making Sense page.