Wikipedia

Guaranteed minimum income

(Redirected from Guaranteed wage plan)
For the system where citizens receive an income stream through the public ownership of industry, see Social dividend.

Guaranteed minimum income (GMI), also called minimum income (or mincome for short), is a social-welfare system that guarantees all citizens or families an income sufficient to live on, provided that certain eligibility conditions are met, typically: citizenship and that the person in question does not already receive a minimum level of income to live on.

The primary goal of a guaranteed minimum income is reduction of poverty. Under more unconditional requirements, when citizenship is the sole qualification, the program becomes a universal basic income (UBI) system. Unlike a guaranteed minimum income, UBI does not typically take into account what a recipient already earns before receiving a UBI.

Elements

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A system of guaranteed minimum income can consist of several elements, most notably:

History

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Pre-modern antecedents

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Persian monarch Cyrus the Great (c. 590 to c. 529 B.C.), whose government used a regulated minimum wage, also provided special rations to families when a child was born.[1]

Cash assistance GMI was first documented by the third century BCE Greek philosopher, Aristotle, in his review of the Athenian Constitution.[2] The modern equivalent would be a safety net program for people with less than $1,000 USD in savings to receive $20 USD per day.

The Roman Republic and Empire offered the Cura Annonae, a regular distribution of free or subsidized grain or bread to poorer residents. The grain subsidy was first introduced by Gaius Gracchus in 123 B.C., then further institutionalized by Julius Caesar and Augustus Caesar.[3][4]

The first Sunni Muslim Caliph Abu Bakr, who came to power in 632 C.E., introduced a guaranteed minimum standard of income, granting each man, woman and child ten dirhams annually. This was later increased to twenty dirhams.[5][better source needed]

Modern proposals

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In 1795, American revolutionary Thomas Paine advocated a citizen's dividend to all United States citizens as compensation for "loss of his or her natural inheritance, by the introduction of the system of landed property" (Agrarian Justice, 1795).

French Emperor Napoleon Bonaparte echoed Paine's sentiments and commented that 'man is entitled by birthright to a share of the Earth's produce sufficient to fill the needs of his existence' (Herold, 1955).

The American economist Henry George advocated for a dividend paid to all citizens from the revenue generated by a land value tax.[6]

American economist Milton Friedman began advocating a basic income in the form of a negative income tax in the early 1940s. He discusses the proposal his 1962 book Capitalism and Freedom and his 1980 book Free to Choose.[7][8]

In 1963, Robert Theobald published the book Free Men and Free Markets, in which he advocated a guaranteed minimum income (the origin of the modern version of the phrase).

In 1966, the Cloward–Piven strategy advocated "overloading" the US welfare system to force its collapse in the hopes that it would be replaced by "a guaranteed annual income and thus an end to poverty".

In his final book Where Do We Go from Here: Chaos or Community? (1967), Martin Luther King Jr. wrote[9]

I am now convinced that the simplest approach will prove to be the most effective—the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.

— from the chapter titled "Where We Are Going"

In 1968, James Tobin, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce in that year a system of income guarantees and supplements.[10]

In 1969, President Richard Nixon's Family Assistance Plan would have paid a minimum income to poor families. The proposal by Nixon passed in the House but never made it out of committee in the Senate.[citation needed]

In 1973, Daniel Patrick Moynihan wrote The Politics of a Guaranteed Income, in which he advocated the guaranteed minimum income and discussed Richard Nixon's Guaranteed Annual Income (GAI) proposal.[11]

In 1987, New Zealand's Labour Finance Minister Roger Douglas announced a Guaranteed Minimum Family Income Scheme to accompany a new flat tax. Both were quashed by then Prime Minister David Lange, who sacked Douglas.[12]

In his 1994 "autobiographical dialog", classical liberal Friedrich Hayek stated: "I have always said that I am in favor of a minimum income for every person in the country".[13]

In 2013, the Equal Life Foundation published the Living Income Guaranteed Proposal,[14] illustrating a practical way to implement and fund a minimum guaranteed income.[15]

In 2017, Harry A. Shamir (US) published the book Consumerism, or Capitalism Without Crises, in which the concept was promoted by another label, as a way to enable our civilization to survive in an era of automation and computerization and large scale unemployment. The book also innovates a method to fund the process, tapping into the underground economy and volunteerism.

Other modern advocates include Ayşe Buğra (Turkey), The Green Economics Institute (GEI),[16] and Andrew Coyne (Canada).[17]

Funding

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Tax revenues would fund the majority of GMI proposals. As most GMI proposals seek to create an earnings floor close to or above poverty lines amongst all citizens, the fiscal burden would require equally broad tax sources, such as income taxes or VATs. To varying degrees, a GMI might be funded through the reduction or elimination of other social security programs, such as unemployment insurance.

Another approach for funding is to acknowledge that all modern economies use fiat money and thus taxation is not necessary for funding. However, the fact that there are no financial constraints does not mean other constraints, such as on real resources, do not exist. A likely outcome based on the economic theory known as Modern Monetary Theory would be a moderate increase in taxation to ensure the extra income would not cause demand-pull inflation. This hypothetical Chartalist approach can be seen in the implementation of quantitative easing programs where, in the United States, over three trillion dollars[18][19] were created without requiring taxes.

Examples around the world

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Austria

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Main article: de:Sozialhilfe (Österreich)

Social assistance is the last social safety net provided by the state (principle of subsidiarity). Social assistance is only granted if people cannot secure their livelihood either through their own efforts or through family assistance (maintenance obligation) or on the basis of a social insurance or other benefit entitlement. Due to other existing benefits in Austria, many people are not dependent on social assistance.

Belgium

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Main article: fr:Revenu d'intégration
Main article: nl:Leefloon

Brazil

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Minimum income has been increasingly accepted by the Brazilian government. In 2004, President Lula da Silva signed into law a bill to establish a universal basic income.[20] This law is primarily implemented through the Bolsa Família program. Under this program, poorer families receive a direct cash payment via a government issued debit card. Bolsa Família is a conditional cash transfer program, meaning that beneficiaries receive their aid if they accomplish certain actions. Families who receive the aid must put their children in school and participate in vaccination programs. If they do not meet these requirements, they are cut off from aid.[21] The program has been criticised as vote-buying, trading productive individuals' earning for the votes of welfare recipients[22] As of 2011, approximately 50 million people, or a quarter of Brazil's population, were participating in Bolsa Família.[23]

Canada

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Main article: Mincome

Canada has experimented with minimum income trials. During the Mincome experiment in Manitoba in the 1970s, Mincome provided lower-income families with cash transfers to keep them out of poverty.[24] The trial was eventually ended but this was due to budget shortfalls and a change in government.

The province of Ontario began a minimum income experiment in 2017. Approximately 4000 citizens began to receive a stipend based on their family situation and income.[25] Recipients of this program could receive upwards of $10,000 per year. Government researchers used this pilot as a way of testing to see if a minimum income can help people meet their basic needs.[26] On 31 August 2018, following a change in government, incoming Premier Doug Ford announced that the pilot would be cancelled at the end of the current fiscal year.

China

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China's Minimum Livelihood Guarantee also called dibao, is a means-tested social assistance scheme introduced in 1993 and expanded to all Chinese cities in 1999.[27][28][29]

Cyprus

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In July 2013, the Cypriot government unveiled a plan to reform the welfare system in Cyprus and create a 'Guaranteed Minimum Income' for all citizens.[30]

Denmark

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Main article: da:Kontanthjælp

Kontanthjælp (formerly known as bistandshjælp) is a public benefit in Denmark granted to citizens who would otherwise not be able to support themselves or their families. In principle, cash benefits are a universal right for all citizens who meet certain statutory criteria.

Estonia

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Main article: et:Toimetulekutoetus

A subsistence allowance is financial help for a person or family in need, which provides minimal resources for everyday life (food, medicine, housing costs, etc.).

Finland

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Main article: fi:Toimeentulotuki

Basic subsistence allowance paid by Kela may be granted to a person or family whose income and assets are insufficient to cover the necessary daily expenses.

France

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In 1988, France was one of the first countries to implement a minimum income, called the Revenu minimum d'insertion. In 2009, it was turned into Revenu de solidarité active (RSA), a new system that aimed to solve the poverty trap by providing low-wage workers a complementary income to encourage activity.

Germany

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Main article: Hartz concept § Hartz IV
Main article: de:Sozialhilfe (Deutschland)

Greece

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Main article: el:Ελάχιστο Εγγυημένο Εισόδημα

The minimum guaranteed income is a selective financial benefit to ensure that all citizens enjoy a minimum standard of living and cover their basic needs. It has been tested and implemented in European Union countries and others. In 2019 it was incorporated as a requirement in the Greek Constitution.

Hungary

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Main article: hu:Szociális intézmények

India

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Modern independent India developed many means and livelihood tested cash transfer programs through Direct Benefit Transfer at both the federal and the state level. At the federal level, these include minimum income social pension programs such as National Social Assistance Scheme, guaranteed employment program like National Rural Employment Guarantee Act, 2005 or a disability aid like Deendayal Disabled Rehabilitation Scheme. At the state level, there can be additional minimum income programs, one such being "Laksmir Bhandar" run by the state of West Bengal that transfers a minimum aid to families without work in the state.[31]

Ireland

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Main article: Social security in the Republic of Ireland § Social Assistance

In Ireland, €20 of earnings per day of permitted work (beneficiaries are allowed up to three days per week) is disregarded from employment income when calculating Jobseekers’ Allowance entitlement and deductions are calculated as 60 percent of earnings less this income disregard. In addition, the Part-time Job Incentive Scheme and Back to Work Family Dividend are fixed-duration payments offered to the long-term unemployed incentive moving into work. In return for relinquishing claims to primary assistance benefits, both schemes provide benefits for a fixed duration that are slightly lower than household GMI entitlements, but which are not tapered with employment income, subject to certain eligibility requirements. Ireland's relatively generous tapering system serves to smooth disincentives to increase income and work and contributes to their lower measured participation tax rates (PTRs) and marginal effective tax rates (METRs).[32]

Italy

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The citizens' income was a social welfare system created in Italy in January 2019.[33][34] Although its name recalls one of a universal basic income, this provision was actually a form of conditional and non-individual guaranteed minimum income.[35][36]

Netherlands

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Main article: nl:Participatiewet

Norway

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Main article: no:Sosialhjelp

Income support can be granted if the applicant has insufficient income and resources to live on and is not entitled to other social security benefits. Income support is paid by the Norwegian Labour and Welfare Administration.

Poland

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Main article: pl:Zasiłek stały

Portugal

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Main article: pt:Rendimento Social de Inserção

The Social Insertion Income is a benefit for combating poverty, enabling individuals and their families to obtain support adapted to their situation, facilitating the satisfaction of their basic needs and aiming to integrate them into work, society and the community.

Saudi Arabia

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Saudi Arabia has a Citizen's Account Program which provides a basic income to registered citizens. In December 2017, immediately before the program began, more than 3.7 million households had registered, representing 13 million people, or more than half the population.[37] As of 2013, between one fifth and one third of Saudi residents are estimated to be non-citizens.[38][39][40][needs update]

Slovakia

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Material need assistance (pomoc v hmotnej núdzi) includes one hot meal a day, essential clothing and shelter.[41]

South Africa

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The Social Relief of Distress grant (SRD) in South Africa is given to those whose monthly income falls short of the individual food poverty line, which is the minimal amount required to buy food that provides adequate calories for survival.[42]

Spain

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Main article: es:Ingreso mínimo vital

In Spain, the ingreso mínimo vital is an economic benefit guaranteed as part of the Social security in Spain. The IMV is defined as a "subjective right" and is intended to prevent poverty and social exclusion of people who live alone or integrated into a coexistence unit when they are in a situation of vulnerability due to lack of sufficient financial resources to cover their basic needs.[43] The benefit, which is not fixed and varies depending on various factors, ranges between 462 and 1015 euros per month, is expected to cover 850,000 households (approximately 2.5 million people) and will cost the government 3 billion euros per year.[43][44]

Sweden

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Main article: sv:Försörjningsstöd

Social assistance consists partly of a "national standard" (riksnorm) and partly of "reasonable costs outside the national standard". The national standard includes costs such as food, clothing and footwear. Reasonable non-standard costs include rent and household electricity.

Switzerland

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Main article: de:Sozialhilfe (Schweiz)

United Kingdom

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Main article: Universal Credit

Universal Credit is a social welfare program in the United Kingdom that consolidates several means-tested benefits into a single payment, aiming to simplify the welfare system and incentivize work.

United States

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The United States has multiple social programs that provide guaranteed minimum incomes for individuals meeting certain criteria such as assets or disability. For instance, Supplemental Security Income (SSI) is a United States government program that provides stipends to low-income people who are either aged (65 or older), blind, or disabled. SSI was created in 1974 to replace federal-state adult assistance programs that served the same purpose. Today the program provides benefits to approximately eight million Americans. Another such program is Social Security Disability Insurance (SSD or SSDI), a payroll tax-funded, federal insurance program. It is managed by the Social Security Administration and is designed to provide income supplements to people who are restricted in their ability to work because of a disability, usually a physical disability. SSD can be supplied on either a temporary or permanent basis, usually directly correlated to whether the person's disability is temporary or permanent.

An early guaranteed minimum income program in the U.S. was the Aid to Families with Dependent Children (AFDC), established by the Social Security Act. Where previously the responsibility to assist needy children lay in the hands of the states, AFDC transferred that authority to the federal government.[45] Over time, the AFDC was often criticized for creating disincentives to work, leading to many arguing for its replacement. In the 1970s, President Richard M. Nixon proposed the Family Assistance Program (FAP), which would replace the AFDC. FAP was intended to fix many of the problems of the AFDC, particularly the anti-work structure. Presidential nominee George McGovern also proposed a minimum income—in the form of a Universal Tax Credit. Ultimately, neither of these programs was implemented. Throughout the decade, many other experimental minimum income programs were carried out in cities throughout the country, such as the Seattle-Denver Income Maintenance Experiments.[46] In 1996, under President Bill Clinton, the AFDC was replaced with the Temporary Assistance for Needy Families program. This would block grant funds to the states to allow them to decide how aid would be distributed.[45]

Another guaranteed minimum income program in the U.S. is the Earned Income Tax Credit. This is a refundable tax credit that gives poorer families cash assistance every year. The EITC avoids the welfare trap by subsidizing income, rather than replacing it.[47]

Other countries

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  • Bulgaria: Социални помощи[48]
  • Croatia: Zajamčena Minimalna Naknada[49]
  • Czech Republic: Příspěvek na živobytí[50]
  • Iceland: Fjárhagsaðstoð[51]
  • Latvia: Sociālā palīdzība[52]
  • Lithuania: Piniginė socialinė parama
  • Romania: Venit minim garantat[53]
  • Slovenia: Denarna socialna pomoč[54]

See also

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References

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  1. ^ Koch, Heidemarie (1996). Es kündet Dareios der König ... : vom Leben im persischen Grossreich (2 Aufl., Sonderausg ed.). Mainz/Rhein: Von Zabern. ISBN 3-8053-1934-7. OCLC 75784091.
  2. ^ "The Internet Classics Archive | The Athenian Constitution by Aristotle". classics.mit.edu. Retrieved 2024-07-29.
  3. ^ Erdkamp, Paul, "The Food Supply of the Capital," in The Cambridge Companion to Ancient Rome, Cambridge: Cambridge University Press, pp. 262-264
  4. ^ Cristofori, Alessandro. "Grain Distribution in Late Republican Rome".
  5. ^ Grace Clark: Pakistan's Zakat and 'Ushr as a Welfare System
  6. ^ George, Henry (1871). Our Land and Land Policy, National and State. White & Bauer [etc.] p. 230. ISBN 9781230444703.
  7. ^ Friedman, Milton (2002) [1962], Capitalism and Freedom (40th anniversary ed.), Chicago: University of Chicago Press, pp. 190–195, ISBN 978-0-226-26421-9
  8. ^ Friedman, Milton; Friedman, Rose (1990) [1980], Free to Choose: A Personal Statement (1st Harvest ed.), New York: Harcourt, pp. 119–124, ISBN 978-0-156-33460-0
  9. ^ Martin Luther King jr., Where Do We Go from Here: Chaos or Community? (New York: Harper & Row, 1967)
  10. ^ Economists' Statement on Guaranteed Annual Income, 1/15/1968-4/18/1969 folder, General Correspondence Series, Papers of John Kenneth Galbraith, John F. Kennedy Presidential Library. Cited in: Jyotsna Sreenivasan, "Poverty and the Government in America: A Historical Encyclopedia." (Santa Barbara: ABC-CLIO, 2009), page 269
  11. ^ "Richard Nixon: Address to the Nation on Domestic Programs". Archived from the original on 2018-10-10. Retrieved 2014-12-01.
  12. ^ "New Zealand Is Jolted By a Speedy Decontrol", Seth Mydans, The New York Times (24 February 1988)
  13. ^ Hayek on Hayek: An Autobiographical Dialogue by F. A. Hayek, edited by Stephen Kresge and Leif Wenar (Chicago: University of Chicago Press, 1994)
  14. ^ "The Living Income Guaranteed Proposal".
  15. ^ "The Living Income Guaranteed Proposal". Living Income Guaranteed. Archived from the original on 2020-05-22. Retrieved 2014-05-19.
  16. ^ "Green Economics". GEI. Archived from the original on 1 September 2009. Retrieved 4 January 2020.
  17. ^ "A minimum income, not wage, is a fairer way to distribute wealth" The Financial Post (8 April 2013)
  18. ^ Fredgraph
  19. ^ wonkmonk (12 May 2012). "Ben Bernanke: As a Literal Fact the Fed is not Printing Money". Archived from the original on 12 December 2021 – via YouTube.
  20. ^ Wispelaere, Jurgen De (October 2016). "Basic Income in Our Time: Improving Political Prospects Through Policy Learning?". Journal of Social Policy. 45 (4): 617–634. doi:10.1017/s0047279416000039. ISSN 0047-2794.
  21. ^ "Happy families". The Economist. 7 February 2008. ISSN 0013-0613. Retrieved 30 November 2017.
  22. ^ Hunter, WENDY (2013). ""Whither Clientelism? Good Governance and Brazil's Bolsa Família Program." Comparative Politics Vol. 46, no 1 (October): 43-62". Comparative Politics. 46 (1): 43–62. doi:10.5129/001041513807709365. JSTOR 43664332.
  23. ^ "Overview". World Bank. Retrieved 30 November 2017.
  24. ^ "A guaranteed annual income? From moncome to millennium". Policy Options. Retrieved 30 November 2017.
  25. ^ Petroff, Alanna. "Canada: Ontario launches guaranteed income program for 4,000 residents". CNNMoney. Retrieved 30 November 2017.
  26. ^ "Ontario Basic Income Pilot". www.ontario.ca. Retrieved 30 November 2017.
  27. ^ Solinger, Dorothy J. (2017). "Manipulating China's "Minimum Livelihood Guarantee": Political Shifts in a Program for the Poor in the Period of Xi Jinping". China Perspectives. 2017/2. Open Edition.
  28. ^ Wang, Jinxian; Bai, Yanfeng (2016). "Development of minimum livelihood guarantee programmes in urban China: an empirical analysis based on 31 regions over 2003–2013". China Journal of Social Work. 9 (2): 155–177. doi:10.1080/17525098.2016.1231256. hdl:1887/74128.
  29. ^ Qian, Jiwei (2014). "Anti-Poverty in China: Minimum Livelihood Guarantee Scheme". East Asian Policy. 05.
  30. ^ "President announces 'Guaranteed Minimum Income' for all citizens". Cyprus Mail. 26 July 2013. Archived from the original on 9 December 2017. Retrieved 26 July 2013.
  31. ^ "Financial aid for women under 'Laxmir Bhandar' scheme from Sep: Mamata". The Statesman. 22 July 2021.
  32. ^ "IMF Working Papers Volume 2021 Issue 179: Guaranteed Minimum Income Schemes in Europe: Landscape and Design (2021)". imfsg. doi:10.5089/9781513584379.001. S2CID 241410350. Retrieved 20 November 2021.
  33. ^ Giuffrida, Angela (6 March 2019). "Italy rolls out 'citizens' income' for the poor amid criticisms". The Guardian. Retrieved 5 October 2020.
  34. ^ "What is Italy's new 'Citizens' Income' scheme?". Euronews. 6 March 2020. Retrieved 5 October 2020.
  35. ^ Girardi, Annalisa (1 April 2019). "The Italian Citizen's Income Reform: Definition And Adjustments". Forbes. Retrieved 5 October 2020.
  36. ^ Gobetti, Sandro (5 July 2018). "Italy: There is no basic income being proposed in Italy". BIN Italia. Retrieved 5 October 2020.
  37. ^ Nereim, Vivian; Carey, Glen (12 December 2017). "Saudi Arabia Will Give Cash to Poorer Citizens Hit by Austerity". Bloomberg.com. Retrieved 16 June 2018.
  38. ^ Saudi Arabia. The World Factbook. Central Intelligence Agency.
  39. ^ The Economist magazine lists an estimated nine million: "Go home, but who will replace you?". The Economist. 16 November 2013. out of a population of 30 million: "Saudi Arabia No satisfaction". The Economist. 1 February 2014.
  40. ^ جريدة الرياض. "جريدة الرياض : سكان المملكة 27 مليوناً بينهم 8 ملايين مقيم". Alriyadh.com.
  41. ^ "Pomoc v hmotnej núdzi - MPSVR SR". www.employment.gov.sk. Retrieved 2024-05-22.
  42. ^ Sheffield, Hazel (2024-06-08). "Free money? South Africa floats universal basic income for all". The Guardian. ISSN 0261-3077. Retrieved 2024-06-08.
  43. ^ a b Ng, Kate (1 May 2020). "Spain approves national minimum income scheme". The Independent. Retrieved 4 September 2020. Deputy Prime Minister Pablo Iglesias told a news conference on Friday the creation of a minimum income worth €462 (£416.92) a month will target some 850,000 households or 2.5 million people. The government would pay the monthly stipend and top up existing revenue for people earning less so that they receive at least that minimum amount every month, he said. The minimum income would increase with the number of family members, up to a maximum of €1,015 (£916.30) each month. The programme would cost the government about €3 billion a year.
  44. ^ "Escrivá anuncia que el ingreso mínimo vital sacará de la pobreza extrema a 1,6 millones de personas". ELMUNDO. 29 May 2020. Retrieved 6 June 2020.
  45. ^ a b Lurie, Irene (1 January 1997). "Temporary Assistance for Needy Families: A Green Light for the States". Publius: The Journal of Federalism. 27 (2): 73–87. doi:10.1093/oxfordjournals.pubjof.a029915. ISSN 0048-5950.
  46. ^ Larson, David (1 January 1992). "Long Overdue: The Single Guaranteed Minimum Income Program". University of Detroit Mercy Law Review. 69: 353.
  47. ^ Zelleke, Almaz (December 2005). "Basic Income in the United States: Redefining Citizenship in the Liberal State". Review of Social Economy. 63 (4): 633–648. doi:10.1080/00346760500364866. S2CID 144251010.
  48. ^ "Социални помощи". Официален сайт на Агенция за социално подпомагане (in Bulgarian). Retrieved 2024-05-22.
  49. ^ "Zajamčena minimalna naknada - gov.hr". gov.hr. Retrieved 2024-05-22.
  50. ^ "Pomoc v hmotné nouzi". www.mpsv.cz. Retrieved 2024-05-22.
  51. ^ "Financial Aid | Reykjavik". reykjavik.is. Retrieved 18 July 2022.
  52. ^ "Pašvaldību sociālā palīdzība | Labklājības ministrija". www.lm.gov.lv (in Latvian). Retrieved 2024-06-09.
  53. ^ "Venit minim garantat". May 2020.
  54. ^ "Denarna socialna pomoč | GOV.SI". Portal GOV.SI (in Slovenian). Retrieved 2024-05-22.

Further reading

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