The Speenhamland Solution

“Take the Money And Run,” by Nathan Heller. The New Yorker, 7/9/2018.

In 1795, the magistrates of the English village of Speenhamland met to solve a financial crisis: The increasing price of grain was placing more people in  poverty, even among the employed. In their current system, the adult population had been divided into three groups: those who could work, those who were unable to work, and those who could work, but didn’t want to. The working group and the disabled were given aid, but those who simply did not want to work were punished. But as the grain prices continued to rise, the town would soon be overwhelmed with the expense.

So far, it sounds much like our situation today.

The solution the magistrates came up with was to supplement the working groups wages to cover the increased cost of living. Those not working, either because of disability or laziness, were given a living stipend. Everyone got something, which is the mark of all successful government policies.

Soon, however, the town population nearly doubled. The subsidies allowed couples to rear families before they could afford it. Families now saw children as potential wage earners, and the more, the better. David Ricardo complained that the system was a detriment to prosperity and invited “imprudence by offering [the imprudent] a portion of the wages of the prudent.” (The system had spread to outlying areas, so the rise in population was not from newcomers.)

Pretty much what we hear, today. No one was happy with the Speenhamland system, and it was abandoned in 1863, replaced by its extreme opposite: a Dickensian workhouse system.

The experiment was not forgotten. Karl Marx attacked the system in Das Kapital while others complained it divorced lower classes from the labor market. In the Nixon Administration, Daniel Moynihan published a book about it.

Nixon proposed replacing the multitude of separate welfare payments with one payment of Universal Basic Income (UBI), bringing everyone’s income to a minimum of $11,000 per year for a family of four (in today’s dollars) plus food stamps.  Certainly not a handsome sum, but livable. He called it “The Family Assistance Plan.” This was a variation of the original Speenhamland plan, and assured no American would have to live on less.

Earned wages would be subtracted from the stipend. But Nixon’s plan affected too many entrenched interests, and it died in the Senate.

In other plans, the UBI would be set at an amount enough to live on (somewhere in America) but not so much as to stifle ambition. Most estimates centered around $1,000 per month. To live on such an amount would require many to move to a cheaper community, which is not going to happen. And the cost would be $3.5 trillion, requiring a raise in taxes, which is not going to happen, either. Raise my taxes to support a lazy, non-worker? Never!

The problem seems that many consider work to be an onerous activity whose only value is that it earns money. Only later, after retirement, are its other values recognized: the discipline of a daily schedule, the socializing with a variety of people, the pride of accomplishment, and learning new skills.

Someday, as automation continues to grow, work will be recognized as a privilege.

Finland had been running a pilot program of UBI, but decided to end it after a year, not a good sign. Several other trial programs are ongoing. Proponents say UBI is not perfect, but is still the best system available.

Detractors hesitate to hand out money to junkies, alcoholics, and scam artists, but a Liberian trial showed most of the new money went for living expenses, not supporting their vices. (I would like to see more details. If a person is assured of food on the table, they can squander any other income on their vices.)

Many plans make it more palatable, making it seem less of a handout, by giving everyone the same UBI. Supposedly, the rich would add it to their investments. And this seems to be the great unknown: how much will the payments increase the economy as people spend or invest their payments? Is the current practice of handing out free cell phones a subsidy to the poor, or a subsidy to the cell phone industry?

Books on the subject reviewed in the article are:

Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World, by Annie Lowerey.

In Our Hands: A Plan to Replace the Welfare State, by Charles Murray.

Fair Shot: Rethinking Inequality and How We Earn, by Chris Hughes.

Basic Income: A Radical Proposal for a Free Society and a Sane Economy, by Philippe Van Parijs and Yannick Vanderboght.

Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream, by Andy Stern.

The Failed Welfare Revolution, by Brian Steensland

Utopia for Realists, by Rutger Bregman

(The titles reflect the author’s bias.)


About Roger Walck

My reasons for writing this blog are spelled out in the posting of 10/1/2012, Montaigne's Essays. They are probably not what you think.
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