The living wage

Over the last few years, we’ve observed an unexpected resurgence of interest in the idea of a universal basic income. The underlying notion is straightforward enough, as Nathan Heller summarizes it in a recent article in The New Yorker:

A universal basic income, or U.B.I., is a fixed income that every adult—rich or poor, working or idle—automatically receives from government. Unlike today’s means-tested or earned benefits, payments are usually the same size, and arrive without request…In the U.S., its supporters generally propose a figure somewhere around a thousand dollars a month: enough to live on—somewhere in America, at least—but not nearly enough to live on well.

This concept—which Heller characterizes as “a government check to boost good times or to guard against starvation in bad ones”—has been around for a long time. As one possible explanation for its current revival, Heller suggests that it amounts to “a futurist reply to the darker side of technological efficiency” as robots replace existing jobs, with prominent proponents including Elon Musk and Richard Branson. And while the present political climate in America may seem unfavorable toward such proposals, it may not stay that way forever. As Annie Lowery, the author of the new book Give People Money, recently said to Slate: “Now that Donald Trump was elected…people are really ticked off. In the event that there’s another recession, I think that the space for policymaking will expand even more radically, so maybe it is a time for just big ideas.”

These ideas are certainly big, but they aren’t exactly new, and over the last century, they’ve attracted support from some surprising sources. One early advocate was the young Robert A. Heinlein, who became interested in one such scheme while working on the socialist writer Upton Sinclair’s campaign for the governorship of California in 1934. A decade earlier, a British engineer named C.H. Douglas had outlined a plan called Social Credit, which centered on the notion that the government should provide a universal dividend to increase the purchasing power of individuals. As the Heinlein scholar Robert James writes in his afterword to the novel For Us, the Living:

Heinlein’s version of Social Credit argues that banks constantly used the power of the fractional reserve to profit by manufacturing money out of thin air, by “fiat.” Banks were (and are) required by federal law to keep only a fraction of their total loans on reserve at any time; they could thus manipulate the money supply with impunity…If you took away that power from the banks by ending the fractional reserve system, and instead let the government do the exact same thing for the good of the people, you could permanently resolve the disparities between production and consumption. By simply giving people the amount of money necessary to spring over the gap between available production and the power to consume, you could end the boom and bust business cycle permanently, and free people to pursue their own interests.

And many still argue that a universal basic income could be accomplished, at least in part, by fiat currency. As Lowery writes in her book: “Dollars are not something that the United States government can run out of.”

Heinlein addressed these issues at length in For Us, the Living, his first attempt at a novel, which, as I’ve noted elsewhere, miraculously transports a man from the present into the future mostly so that he can be subjected to interminable lectures on monetary theory. Here’s one mercifully short example, which sounds a lot like the version of basic income that you tend to hear today:

Each citizen receives a check for money, or what amounts to the same thing, a credit to each account each month, from the government. He gets this free. The money so received is enough to provide the necessities of life for an adult, or to provide everything that a child needs for its care and development. Everybody gets these checks—man, woman, and child. Nevertheless, practically everyone works pretty regularly and most people have incomes from three or four times to a dozen or more times the income they receive from the government.

Years later, Heinlein reused much of this material in his far superior novel Beyond This Horizon, which also features a man from our time who objects to the new state of affairs: “But the government simply gives away all this new money. That’s rank charity. It’s demoralizing. A man should work for what he gets. But forgetting that aspect for a moment, you can’t run a government that way. A government is just like a business. It can’t be all outgo and no income.” And after he remains unwilling to concede that a government and a business might serve different ends, another character politely suggests that he go see “a corrective semantician.”

At first, it might seem incongruous to hear these views from Heinlein, who later became a libertarian icon, but it isn’t as odd as it looks. For one thing, the basic concept has defenders from across the political spectrum, including the libertarian Charles Murray, who wants to replace the welfare state by giving ten thousand dollars a year directly to the people. And Heinlein’s fundamental priority—the preservation of individual freedom—remained consistent throughout his career, even if the specifics changed dramatically. The system that he proposed in For Us, the Living was meant to free people to do what they wanted with their lives:

Most professional people work regularly because they like to…Some work full time and some part time. Quite a number of people work for several eras and then quit. Some people don’t work at all—not for money at least. They have simple tastes and are content to live on their heritage, philosophers and mathematicians and poets and such. There aren’t many like that however. Most people work at least part of the time.

Twenty years later, Heinlein’s feelings had evolved in response to the Cold War, as he wrote to his brother Rex in 1960: “The central problem of today is no longer individual exploitation but national survival…and I don’t think we will solve it by increasing the minimum wage.” But such a basic income might also serve as a survival tactic in itself. As Heller writes in The New Yorker, depending on one’s point of view, it can either be “a clean, crisp way of replacing gnarled government bureaucracy…[or] a stay against harsh economic pressures now on the horizon.”