Wednesday, April 30, 2014

Minimum Income, Wellbeing, and Deirdre McCloskey on Parisian Beggars

Let us accept, if just for argument's sake, that the goal of politics and economic systems is the provisioning of the good life, as variously conceived, as broadly and fairly as possible. How then to achieve that aim? On the one hand, it would seem to require a commitment to individual freedom, old school Enlightenment style liberalism: people should be empowered to choose their own good life. At the same time, it also requires a commitment to common goods, the collective basis for individual flourishing and the source of much of our social wellbeing. In Sunday's NY Times, Tony Schwartz makes the case that our lasting successes and and life satisfaction are based on doing something that really matters, having the sense "that we're truly adding value in the world" (also the argument in my forthcoming book on The Good Life).

Economist Deirdre McCloskey has been wrestling with this contradiction throughout her career (which began as Donald McCloskey). In a chapter in Cash on the Table, she observes that economists overvalue self-interest and anthropologists overvalue social goods--and that both miss the complicated interplay.  As she explains to Paul Solman in a recent PBS NewsHour interview, this isn't just theoretical. She generally supports market approaches, but she also advocates a guaranteed minimum income on the grounds of moral values:
I was on a subway in Paris a long time ago, and this guy came into the car, and the first thing he said was: I’m 24 years old. Because he couldn’t beg if he was 27 years old — that’s when the minimum income came in. That is, if you were 27 in France, you got a minimum income. So he couldn’t persuasively beg. I’d like people who can’t make enough income to be helped out this way.

In the context of the developing world, guaranteed minimum incomes are a variant of conditional cash transfers (paying folks to keep their kids in school and healthy) and unconditional cash transfers. Give Directly gives $1000 to selected households in Kenya and Uganda; families do not apply, they are identified as needy and given the windfall. Overhead costs for such programs are minimal compared to traditional aid, and supporters argue that folks themselves know best what they need to get ahead.

Supporters of a minimum income argue that it both prevents extreme poverty and can encourage entrepreneurial behavior (by reducing the costs of failure). And more than just entrepreneurial ventures it can allow a greater range of life projects and wellbeing.