The pure evil of a Basic Income

Students of the economics dept. of the University of Amsterdam organised a Room for Discussion (RFD) about the “basic income”. This should rather be called a benefit since one gets money from the state for free. This is the video (1 hour and 6 minutes). The moment was well chosen since a day later there was a conference of Unconditional Basic Income Europe (UBIE) that collected some 285.000 signatures from all across Europe for such an initiative. (We are also reminded of How much is enough? by Robert and Edward Skidelsky.)

One discussant in Amsterdam was Guy Standing, professor in Development Studies at SOAS (University of London) and one of the founders of the Basic Income Earth Network (BIEN). I am a sort of fan of Standing because of his 1988 ILO study on Sweden, that is in the literature list of my book DRGTPE. (And a fan of Robert Skidelsky too, see DRGTPE again.)

Check at minute 45:30+ how Standing explains that there is a world crisis in low paid and insecure jobs with a new underclass that he calls “the precariat“. Standing accuses the political parties of not having a solution, and especially the leftist parties such as Labour who should be concerned on this. I tend to agree with the diagnosis on the disadvantaged and I also agree with much of his analysis: but not on the whole.

The other discussant was Paul de Beer, professor at the University of Amsterdam and scientifc director of De Burcht, a research institute for the labour unions. De Beer was/is also involved in BIEN (he was at the first BIEN conference in 1986). He is a proponent of the basic income as well, though he has learned to downplay it for established welfare states so that he advises it for developing countries that don’t have an established welfare state yet.

De Beer has also been involved since 1982 in the Wiardi Beckman Stichting (WBS), the “scientific bureau” of the PvdA, the Dutch Labour Party. Clearly, Standing’s accusation w.r.t. Labour should hit at De Beer. The accusation doesn’t quite hit because De Beer tends to agree on the basic income and he could wash his hands that it are the Labour politicians who don’t want it.

Let us compare a basic benefit and full employment:

  1. The basic benefit is irrelevant for those with a higher productivity. You still need complex arrangements such as unemployment protection for 90% of the labour force. A person who has invested in a profession and job cannot be compensated by merely a basic benefit.
  2. The basic benefit is relevant at the subsistence level. But here issues are complex too. Simply giving people money is not necessarily the right approach. A basic benefit is said to be simpler, but what if someone makes debts and his means drop below subsistence ? You still need surveillance. What if someone has an address in various countries and collects various national basic benefits ? You still need international checks. What with cheap housekeepers from the Philippines ? They are used to a lower subsistence and the houseowner can keep a part of their new higher basic benefit in the rich countries. And so on. It is not simpler. It is different.
  3. The basis benefit does not solve unemployment fully. You still need national investment banks. You still need an Economic Supreme Court to correct for failing democracy. And so on. See DRGTPE.
  4. An alternative is to return to full employment. Allow workers to start working and then we can see from there. My advice is to first eliminate the tax void. This can be done for free and generates most of the advantages. We can see whether we want a basic benefit subsequently. See the table below.

If the current situation is called Amsterdam and abolition of tax void is called Brussels, then the train ride from Amsterdam to Brussels is for free. Let the basic benefit be called Paris. The train ride from Amsterdam to Paris implies partly a train ride to Brussels. Thus the basic benefit implies the abolition of the tax void. But the final stretch to Paris will be expensive, e.g. handing out benefits to housekeepers.

“Amsterdam” “Brussels” “Paris”
Present situation Abolish tax void Basic benefit
Unemployment & benefit burden Free of costs, less unemployment Costly, still unemployment

The cost-benefit analysis (CBA) should be done properly. Proponents of the basic benefit assign positive effects to the basic benefit that however should be assigned to the abolition of the tax void. Dutch readers are referred to Wat stampen we lekker, zegt Muis (1994), also available in Trias Politica & Centraal Planbureau (1994). In terms of effects, the Elephant is the abolition of the tax void and the Mouse is the introduction of a basic benefit. Mouse says: “Aren’t we pounding greatly ?”

Let me explain the manipulation by Paul de Beer:

  1. In 1990 when I presented my new analysis on unemployment, with the possibility to return to full employment, it was not only blocked from discussion at the Dutch Central Planning Bureau (CPB) (resolution of which is the objective of this weblog, see the about page), but it was also blocked from discussion at the WBS, and Paul de Beer was secretary of the blocking committee.
  2. De Beer does not protest against the censorship of science by the directorate of the CPB. I cannot remain a member of a party PvdA that blocks discussion of my scientific analysis and that doesn’t ask questions in parliament about censorship of science by the national government. I am a modest person and I am sure that my analysis is not all that there is, but it seems warranted that the views of the social democratic parties that are now failing could have been affected if they had had a chance to get to understand my analysis.
  3. De Beer must have been misleading Guy Standing at BIEN since 1990 since otherwise Standing would not write as he does.
  4. De Beer clearly has been misleading the Dutch branch of BIEN (“vereniging basisinkomen“).
  5. De Beer clearly misleads the students at Room for Discussion as everyone can verify that he does not mention my analysis in that video. He could have done so out of mere politeness, since I was present and you can see my shoes on the video. But he should have done merely from content. Full employment is a good alternative to a basic benefit. After he had misled the students they gratefully gave him a bottle of wine.
  6. On October 14 2005 there was a small conference organised by the Dutch Labour union FNV and De Burcht, with speakers myself, Paul de Beer and tax professor Leo Stevens (Rotterdam), see the press release. Monitors were FNV chairman Henk van der Kolk and PvdA senator Han Noten. Reactions were given by financial spokespeople for the parties in parliament, notably Stef Blok who is now a cabinet minister. This would have been an excellent place for a discussion on the advantages of abolishing the tax void. But De Beer neglected all that I said and concentrated on a discussion with Stevens. Also Stevens neglected what I said, but that is not the point here.
  7. In December 2013, the Royal Dutch Society for Political Economy (KVS) published a research booklet on labour relations, edited by De Beer. When the topic was selected in December 2012, I informed Paul that the crisis confirmed my analysis, and that I could contribute a paper on the resolution of unemployment, where I provided a link. He did not react. See the result: a misleading document (in Dutch).

Whenever I meet people who are in favour of a basic benefit and I present the counterarguments, it turns out that they are not willing to reconsider their position. Apparently there are strong elements of ideology here. They rather advocate a basic benefit while it will not be introduced quickly, and while I have shown an alternative that will work and has a chance of adoption: full employment. These ideologues do not protest against the censorship of science either.

This may also have played some role at the CPB in 1990. It appeared later that director Gerrit Zalm was in favour of a basic income, as the CPB study Scanning the Future (1992) contains a scenario with a basic benefit. Zalm follows Milton Friedman here. The basic benefit would be at subsistence (as low as possible) and the remainder of the welfare state could be abolished. See Scanning the Future p205 for the “balanced growth” scenario, while this scenario in Nederland in Drievoud (1992) p24 has an explicit negative income tax. When he later became minister of Finance, Zalm replaced tax exemption by a tax credit, with the political idea in mind that this could be developed into a basic benefit. However, he used a deliberate lie to get this change accepted, see the paper Economics as victim between lawyers and mathematics: An explanation for the tax credit, Bulgarian potential fraud, European unemployment and the economic crisis (2013).

Thus, basic-benefit-proponents claim to advance the cause for the disadvantaged, but in fact they block an analysis that would really help those. This concerns one billion people on the planet. Do we see pure evil here or not ?

Don’t censor science – is that so difficult to understand ?

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