Nixon’s Basic Income Plan

Why Richard Nixon once advocated for basic income — and then turned against it.

It was the summer of ’68, the end of the decade that brought us flower power and Woodstock, rock and roll and Vietnam, Martin Luther King and a feminist revolution. It was a time when everything seemed possible, even a conservative president strengthening the welfare state.

While young demonstrators the world over were taking to the streets, five famous economists — John Kenneth Galbraith, Harold Watts, James Tobin, Paul Samuelson, and Robert Lampman — wrote that “[t]he country will not have met its responsibility until everyone in the nation is assured an income no less than the officially recognized definition of poverty.” The New York Times published their letter, signed by 1,200 fellow economists, on the front page.

The next year, Richard Nixon was on the verge of making these economists’ dream a reality by enacting an unconditional income for all poor families. It would have been a massive step forward in the War on Poverty, guaranteeing a family of four $1,600 a year, equivalent to roughly $10,000 in 2016.

First, however, Nixon needed some evidence. Tens of millions of dollars were budgeted to provide a basic income for more than 8,500 Americans in cities around the country. The researchers wanted to answer three questions: (1) Would people work significantly less with a guaranteed income?; (2) Would the program cost too much?; and (3) Would it prove politically unfeasible?

The answers were no, no, and maybe.

Working-hour reductions were low across the board. “The ‘laziness’ contention is just not supported by our findings,” the chief data analyst of the Denver experiment said. “There is not anywhere near the mass defection the prophets of doom predicted.” The decline in paid work averaged 9 percent per family, mostly attributable to twenty-somethings and women with young children.

Later research showed that even the 9 percent finding was probably too high. The original study calculated the percentage from self-reported income.

When researchers compared the self-reported figures with official government records, they discovered that most participants underreported their income. After correcting for this discrepancy, the researchers discovered that the number of hours worked had scarcely decreased at all.

“[The] declines in hours of paid work were undoubtedly compensated in part by other useful activities, such as search for better jobs or work in the home,” noted the Seattle experiment’s concluding report.

One mother earned a degree in psychology and got a job as a researcher. Another woman took acting classes while her husband began composing music. “We’re now self-sufficient, income-earning artists,” she told the researchers. Among youth included in the experiment, almost all the hours not spent working went to education. In New Jersey, the rate of high school graduations for participants rose thirty percent.

But not everyone was pleased with the findings. Martin Anderson, a Nixon adviser and great admirer of libertarian philosopher Ayn Rand, vehemently opposed the plan, fearing a future where money was considered a basic right. The concept of a basic income ran counter to everything he (and his idol) believed in: the smallest possible government with the greatest possible individual responsibility.

So he launched a one-man offensive.

The Shadow of Speenhamland

On the same day that Nixon intended to go public with his plan, Anderson handed him a briefing. Over the weeks that followed, this six-page document, a case report about something that had happened in England 150 years before, did the unthinkable: it changed Nixon’s mind, and, in the process, changed the course of history.

The briefing, called “A Short History of a Family Security System,” opened with a quotation from the Spanish-American writer George Santayana: “Those who cannot remember the past are condemned to repeat it.”

Anderson’s short report consisted almost entirely of excerpts from sociologist Karl Polanyi’s 1944 book The Great Transformation. There, Polanyi describes a system suspiciously close to Nixon’s proposed basic income: the nineteenth-century English Speenhamland plan.

According to Polanyi, Speenhamland incited the poor to idleness, damping their productivity and wages, and threatening the very foundations of capitalism by “prevent[ing] the establishment of a competitive labor market.”

Instead of helping the masses, Polyani charged basic income with “the pauperization of the masses,” who “almost lost their human shape.” Basic income did not introduce a floor, he contended, but a ceiling.

The president was stunned. He changed tack and settled on a new rhetoric. Departing from debates about endemic, structural unemployment that had begun under President Johnson, Nixon now spoke of joblessness as a “choice” and began stressing the importance of gainful employment. He deplored the rise of big government while promoting a plan that would distribute cash assistance to some thirteen million more Americans.

“Nixon was proposing a new kind of social provision to the American public,” writes the historian Brian Steensland, “but he did not offer them a new conceptual framework through which to understand it.”

Instead, in line with his admiration for British prime minister Benjamin Disraeli and Lord Randolph Churchill (the father of Winston), Nixon steeped his progressive ideas in conservative rhetoric. “Tory men and liberal policies are what have changed the world,” he declared.

To mollify Republicans and manage concerns over the Speenhamland precedent the president attached an amendment to his bill: unemployed beneficiaries would have to register with the Department of Labor. Nobody in the White House expected this stipulation would have much effect. “I don’t care a damn about the work requirement,” Nixon said behind closed doors. “This is the price of getting $1,600.”

The next day, the president presented his bill in a televised speech, packaging “welfare” as “workfare.” What Nixon failed to foresee was that his rhetoric of fighting laziness among the poor and unemployed would prove more influential than his policy.

The conservative president who dreamed of going down in history as a progressive leader forfeited a unique opportunity to overthrow a stereotype rooted back in nineteenth-century England: the myth of the lazy poor.

To dispel this stereotype, we have to ask a simple historical question: what was the real deal with Speenhamland?

The Irony of History

Rewind to the year 1795.

The French Revolution had been sending shock waves across Europe for six years. Social discontent had reached a boiling point in England, too. Only two years earlier a young general by the name of Napoleon Bonaparte had crushed the English at the Siege of Toulon.

If that weren’t bad enough, the country was suffering another year of bad harvests with no hope of importing grain from the continent. Grain prices continued to rise, and the threat of revolution loomed ever closer to British shores.

The magistrates of Speenhamland, a district in southern England, realized that repression and propaganda would no longer stem the tide of discontent. Instead, they agreed to radically reform assistance for the poor by supplementing the earnings of “all poor and industrious men and their families” up to the subsistence level. They fixed the rate to the price of bread and paid out per family member.

This was not the first European program of public relief, not even the first in England. During Queen Elizabeth I’s reign, the Poor Law introduced two forms of assistance — one for the “deserving poor” (the elderly, children, and disabled) and another for those deemed fit to work.

The deserving went to almshouses; the “undeserving” to wealthy landowners who won them at auction. The local government supplemented their wages up to an agreed minimum.

The Speenhamland system was unique in that it put an end to the distinction between the deserving and undeserving poor, just as Nixon would aspire to do 150 years later. From then on, needy was just plain needy, and everybody in need had a right to relief.

The system quickly caught on across the south of England. To all appearances, it was a great success; hunger and hardship decreased and, more importantly, revolt was nipped in the bud.

But some raised doubts about the wisdom of aiding the poor.

In his 1786 Dissertation on the Poor Law, the vicar Joseph Townsend warned, “it is only hunger which can spur and goad them on to labor; yet our laws have said, they shall never hunger.”

Another clergyman, Thomas Malthus, drew out Townsend’s ideas. In 1798, he described “the great difficulty” on the road to progress, “that to me appears insurmountable.” His premise was twofold: (1) humans need food to survive, and (2) the passion between the sexes is ineradicable. Conclusion: population growth will always exceed food production.

According to pious Malthus, only sexual abstinence could prevent the four horsemen of the apocalypse from descending to spread war, famine, disease, and death.

But the Speenhamland system apparently encouraged people to marry as fast and procreate as prolifically as possible. Malthus was convinced England was teetering on the brink of a disaster as terrible as the Black Death, which wiped out half the population between 1349 and 1353.

Economist David Ricardo (a close friend of Malthus) was equally skeptical. He believed basic income would create a poverty trap: the poor would work less, causing food production to fall, fanning the flames of a French-style revolution.

The feared uprising broke out in the summer of 1830. Shouting “bread or blood!” thousands of agricultural laborers wrecked landowners’ harvesting machines and demanded a living wage. The authorities arrested, incarcerated, and deported two thousand rioters. Others were sentenced to death.

In London, government officials realized something had to be done. A national inquiry was launched into agricultural working conditions, rural poverty, and the Speenhamland system itself.

It was the largest government survey to date, with investigators conducting hundreds of interviews and collecting reams of data that were ultimately compiled in a thirteen-thousand-page report. But the bottom line could be summed up in a single sentence: Speenhamland had been a disaster.

The investigators blamed basic income for a population explosion, for wage reductions, for increased immoral conduct — effectively, for the utter deterioration of the English working class.

Fortunately, they wrote, as soon as basic income disappeared (1) the poor once more became industrious; (2) they developed “frugal habits”; (3) “demand for their labor” increased; (4) their wages “in general advanced”; (5) they entered into fewer “improvident and wretched marriages”; (6) and their “moral and social condition in every way improved.”

Widely circulated and endorsed, the Royal Commission Report became an authoritative source in the emerging social sciences, marking the first time a government had systematically gathered data to make a complex policy decision.

Even Karl Marx used the Royal Commission Report to condemn the Speenhamland system in Capital thirty years later. Employers used poor relief, he said, to depress wages by putting the responsibility for the reproduction of labor on local government.

Like his friend Friedrich Engels, Marx saw the poor laws as a relic of a feudal past. Releasing the proletariat from the shackles of poverty required a revolution, not a basic income.

Critics of Speenhamland acquired towering authority, with everyone from left to right condemning it as a failure. Eminent thinkers including Jeremy Bentham, Alexis de Tocqueville, John Stuart Mill, Friedrich Hayek, and, above all, Karl Polanyi denounced it. It became the textbook example of government intervention that, despite the best intentions, paved the road to hell.

Faulty Evidence

But was Speenhamland a failure?

In the 1960s and 1970s, historians reexamined the Royal Commission Report. They discovered that the commissioners wrote much of the text before collecting data. Only 10 percent of the distributed questionnaires were ever completed. The study’s designers posed leading questions with fixed answer choices, and also interviewed almost no actual beneficiaries of poor relief.

The evidence, such as it was, came mostly from the local elite, especially the clergy, whose general view was that the poor were growing ever more wicked and lazy.

Rumors circulated that the commission’s secretary, Edwin Chadwick, had “the Bill in his head” before the investigation even started, but was shrewd enough to manufacture some substantiating evidence first.

And according to a fellow commission member, Chadwick was also blessed with the “admirable faculty” of getting eyewitnesses to say what he wanted, just like “a French cook who can make an excellent ragout out of a pair of shoes.”

In short, the Royal Commission Report was a fabrication, riven with bias and flawed methodology. The investigators barely concerned themselves with analyzing the data, though they did employ “an elaborate structure of appendixes to lend more weight to their ‘findings,’” two modern-day researchers note.

Their approach could not have been more different from that of the rigorous experiments conducted in the US in the 1960s and 1970s. Those experiments had been groundbreaking and meticulous but had almost no influence at all, whereas the Royal Commission Report was based on bogus science yet still managed to redirect President Nixon’s course of action 150 years later.

More recent research has revealed that the Speenhamland system actually succeeded. The population explosion that so worried Malthus was attributable chiefly to the growing demand for child labor, not basic income.

In poor families children were a source of security for parents. They could work for a wage and support the family in times of illness or old age. Even today birth rates drop as populations escape poverty and people find other ways to invest in their future.

Ricardo’s analysis was equally faulty. There was no poverty trap in the Speenhamland system: wage earners were permitted to keep at least part of their allowances when their earnings increased. And the rural unrest that so worried Ricardo was actually a result of price hikes caused by England’s return to the gold standard (which he recommended), not basic income.

Recent scholarship also highlights a mismatch between adoption of the policy and unrest; villages with and without the policy rioted in 1830.

All English peasants suffered from the return to the gold standard, along with industrialization in the north and the invention of the threshing machine. Threshers (which separate the wheat from the chaff) destroyed thousands of jobs in one fell swoop, depressing wages and inflating the cost of poor relief.

Fears of declining food production were baseless as well. Agricultural production experienced a steady upward trajectory, increasing by a third between 1790 and 1830.

But while food was more plentiful than ever, a decreasing share of the English population could afford it. Not because they were lazy, but because they were losing the race against the machine.

A Heinous System

In 1834, the British government permanently dismantled the Speenhamland system. The 1830 uprising, which probably would have happened earlier if not for basic income, had sealed the fate of the first cash transfer trial.

The new Poor Law introduced perhaps the most heinous form of “public assistance” that the world has ever witnessed. The Royal Commission forced the poor into senseless slave labor, from breaking stones to walking on treadmills, because they believed workhouses were the only effective remedy against sloth and depravity.

Indeed, it was the specter of the workhouse — not the existence of basic income — that enabled employers to keep wages so miserably low. In the town of Andover, inmates even resorted to gnawing on the bones they were supposed to grind up for fertilizer.

The myth of the lazy poor reinforced another myth: the idea of a free, self-regulating market. Contemporary historians say that blaming the 1830 uprising on Speenhamland “cover[ed] up the first major policy failure of the new science of political economy”: the re-adoption of the gold standard in 1819. Not until after the Great Depression was it clear just how shortsighted Ricardo’s obsession with the gold standard had been. Ultimately, the perfect, self-regulating market proved an illusion.

The Speenhamland system — a form of market regulation — was a much more effective strategy to address poverty. It offered security in a rapidly changing world.

Indeed, “far from having an inhibitory effect, it probably contributed to economic expansion,” concluded a later study. Historian Simon Szreter argues that anti-poverty legislation was instrumental in England’s rise as a world superpower. By boosting workers’ income security and mobility, it made the English agricultural industry the most efficient in the world.

A Pernicious Myth

And yet, almost 150 years later, history was about to repeat itself.

According to Nixon, his generation would do two things deemed impossible by earlier generations: put a man on the moon (which had been accomplished the month before, on July 20, 1969) and eradicate poverty.

Polls showed that 90 percent of US newspapers were enthusiastic about unconditional income for poor families. The Chicago Sun Times called it “A Giant Leap Forward,” the Los Angeles Times “a bold new blueprint.” The National Council of Churches, the labor unions, and even the corporate sector were also all in favor.

A telegram arrived at the White House declaring, “Two upper middle class Republicans who will pay for the program say bravo.” Pundits were going around quoting Victor Hugo: “Nothing is stronger than an idea whose time has come.”

In 1970 it seemed that the time for a basic income had well and truly arrived.

With 243 votes for and 155 against, the House of Representative approved President Nixon’s Family Assistance Plan (FAP) on April 16, 1970. Most expected the plan to pass the Senate, too, which was even more progressive than the House.

But doubts from both sides of the aisle reared in the Senate Finance Committee. “This bill represents the most extensive, expensive, and expansive welfare legislation ever handled,” one Republican senator said.

Most vehemently opposed, however, were the Democrats. They felt the FAP didn’t go far enough, and pushed for an even higher income floor. The Senate and the White House batted the bill back and forth for months before finally giving up entirely.

The following year, Nixon presented a slightly tweaked proposal to Congress. Once again, the bill sailed through the House, now part of a larger reform package. (The vote this time was 288 in favor, 132 against.)

In his 1971 State of the Union address, Nixon declared that his plan to “place a floor under the income of every family with children in America” was the most important item on his legislative agenda.

But once again, the bill foundered in the Senate.

As the 1970s drew to a close the myth of Speenhamland became fodder for the Right once again. Conservative thinkers began lambasting the welfare state, using the same nineteenth-century arguments Nixon had inadvertently revived in his attempt to make basic income more palatable to his conservative constituency.

Wealth and Poverty, the 1981 mega-bestseller by George Gilder, was emblematic. Gilder, who became Reagan’s most cited author, characterized poverty as a moral problem rooted in laziness and vice.

And in Losing Ground (1984), influential sociologist Charles Murray recycled the Speenhamland myth again. Government support, he wrote, would only undermine the sexual morals and work ethic of the poor.

It was Townsend and Malthus all over again. Even former Nixon advisor Daniel Moynihan gave up the fight when he discovered that the Seattle basic income experiment was linked with a 50 percent increase in divorce.

This statistic quickly overshadowed all the other outcomes, such as better school performance and improvements in health. A basic income, evidently, gave women too much independence. (Ten years later, a reanalysis of the data revealed that researchers made a statistical error. There had been no change in the divorce rate at all.)

Ayn Rand’s faithful follower Martin Anderson smelled victory. “Radical welfare reform is an impossible dream,” he crowed in the New York Times. The time had come to axe the old welfare state, just as the Brits had done in 1834.

In 1996, Democratic president Bill Clinton ended “welfare as we know it.” For the first time since the 1935 Social Security Act, assistance for the poor was seen as a favor instead of a right. “Personal responsibility” was the new mantra.

The perfectibility of society made way for the perfectibility of the individual, epitomized by the allocation of $250 million to “chastity training” for single mothers. The Reverend Malthus would surely have approved.

An Idea That Just Won’t Die

Things could have been different. They still can.

Historian Brian Steensland has meticulously traced the rise and fall of basic income in the US and emphasizes that, had Nixon’s plan gone ahead, the ramifications would have been huge.

Public assistance programs would no longer suffer from the misperception that they pander to lazy opportunists; the categories of “deserving” and “undeserving” poor would disappear. And had the United States, the world’s wealthiest nation, adopted basic income in the 1960s, there’s little doubt other countries would have followed suit.

But history took a different turn. Arguments in support of basic income — namely, that the old system was inefficient, expensive, demeaning — came to be leveled against the welfare state in its entirety. Speenhamland’s misinterpreted legacy and Nixon’s misguided rhetoric laid the foundation for Reagan-, Clinton-, and Bush-era cutbacks.

These days, the idea of a basic income for all Americans is, in Steensland’s words, as “unthinkable” as “women’s suffrage and equal rights for racial minorities” was in the past.

It’s hard to imagine that we’ll ever shake off the dogma that if you want money, you have to work for it. That a president as recent and as conservative as Richard Nixon once sought to implement a basic income seems to have evaporated from the collective memory.

Yet some ideas just won’t die.

In recent years basic income has made a comeback on political agendas. Switzerland is planning a referendum. Finland, Canada, and nearly twenty cities in the Netherlands are conducting large-scale experiments. Even Silicon Valley has embraced basic income.

Now is the time to finally let go of pointless distinctions between the deserving and undeserving poor people. Now is the time to move beyond the fallacy that a life without poverty is a privilege you have to work for, rather than a right we all deserve.