Between the First World War and the late 1970s, basic income moved from pamphlets to parliaments. It came close to becoming law in the United States, and its oddest feature was the range of people who backed it.

After the First World War

In 1918 the philosopher Bertrand Russell, in Roads to Freedom, argued for a society in which a small income, enough for necessities, would go to everyone whether or not they worked, with more for those who chose useful work. The same year, the Quaker couple Dennis and Mabel Milner published a Scheme for a State Bonus. The Milners proposed a weekly payment from the state to every citizen, funded by a share of national income, partly to relieve the poverty that followed the war. The Labour Party debated the idea in the early 1920s and turned it down.

In the 1920s the British engineer C. H. Douglas launched the Social Credit movement, which called for a "national dividend" because, he claimed, the economy left people with too little purchasing power to buy what it produced. Most economists rejected his reasoning, and although a Social Credit party won power in the Canadian province of Alberta in 1935, it never paid a dividend on Douglas's lines. In the United States, Senator Huey Long's Share Our Wealth plan of 1934 promised every family a homestead allowance and a minimum yearly income, paid for by capping large fortunes.

Friedman's negative income tax

The most influential version came from a free market economist. In Capitalism and Freedom (1962), Milton Friedman proposed a negative income tax to replace the patchwork of welfare programs. His case was that cash was simpler, less intrusive and cheaper to administer than a maze of programs run by caseworkers, each with its own rules. Friedrich Hayek, another critic of central planning, also accepted a guaranteed minimum income as consistent with a free society.

From the left came similar demands for other reasons. In Where Do We Go From Here: Chaos or Community? (1967), Martin Luther King Jr. argued that the best way to end poverty was to abolish it directly with a guaranteed income, rather than through programs that tried to fix the poor one problem at a time. In 1968 more than 1,000 economists, including Paul Samuelson, James Tobin and John Kenneth Galbraith, signed a public letter urging Congress to adopt a national system of income guarantees.

Nixon's plan

In August 1969 President Richard Nixon proposed the Family Assistance Plan. It would have guaranteed every family with children a minimum income, 1,600 dollars a year for a family of four, phasing out as earnings rose, and it would have covered the working poor as well as single mothers. The Family Assistance Plan passed the House of Representatives in 1970 but died in the Senate Finance Committee. Many conservatives thought it expanded welfare and weakened the incentive to work; many liberals and the National Welfare Rights Organization thought the guarantee far too low. A revised version also failed. The idea surfaced again in 1972, when the Democratic candidate George McGovern proposed a "demogrant" of 1,000 dollars for every person and was attacked for its cost.

What survived was a narrower descendant. The Earned Income Tax Credit, created in 1975, pays a refundable credit only to people with earnings, so it rewards work instead of guaranteeing income. It has grown into one of the largest anti-poverty programs in the United States.

Why the coalition broke

The breadth of support was also a weakness. Friedman wanted a negative income tax to replace other programs and shrink government; King and the welfare rights movement wanted a generous floor added to existing protections. Each side feared the other's version. The same tension divides supporters today: is a basic income a replacement for the welfare state or an addition to it? That fight over design, rather than over the principle, did much to sink the plan in the 1970s.

A further blow came from the experiments described later in this course, which reported modest cuts in work and, in one case, a disputed rise in divorce. By the 1980s the political mood in Britain and America had turned toward attaching conditions to welfare, and the idea retreated to universities. In 1986 scholars founded the Basic Income European Network, which in 2004 became the Basic Income Earth Network, to keep the debate alive.

Worked example: two senators read the same bill

Two senators in 1970 read the Family Assistance Plan. One, a fiscal conservative, likes that it would replace caseworkers' discretion with simple rules, but worries that a guaranteed floor for working families will tempt some to quit. The other, a liberal from a high-cost northern state, likes that it covers the working poor, but sees that 1,600 dollars is below what her state already pays some families and fears the federal plan will become a ceiling rather than a floor.

Both senators accept the principle of an income floor. Both vote no. Their reasons point in opposite directions, so any change that wins one loses the other. The lesson for reformers is that a broad coalition built on a vague idea can fall apart once the details are written down, and that the details, not the slogan, decide who is helped.